POWELL VS. THE FED, AND THE WINNER IS…

The Federal Reserve Board’s monetary policy committee announced last week the fourth consecutive 0.75% increase in its benchmark interest rate, bringing it to a range of 3.75% to 4%, still negative when inflation is taken into account. No surprise. That came when it advised that “in determining the pace of future increases … the Committee will take into account the cumulative tightening of monetary policy, [and] the lags with which monetary policy affects economic activity and inflation.”

That could only mean that it was considering a pause to give the cumulative and long-run effects of its  increases time to bring the 6.2% inflation rate, its preferred measure, closer to its 2% target. Smiles and soaring share prices on Wall Street.