Fed Raises Interest Rates Amid Resilient Economy and Soaring Inflation
The Federal Reserve raised interest rates this week, a move that comes after last year's rate cuts. Fed chairman Kevin Warsh and his colleagues on the Federal Open Market Committee see a buoyant economy and inflation that is taking too long to come down.
They believe it's time to unwind some or all of last year's interest rate cuts, which were made to address concerns about a deteriorating labor market and low inflation. However, this year has seen a resilient U.S. economy and job market, with a new surge in energy prices due to the Iran war.
The financial conditions are loose, with the stock market near all-time highs and vast sums being raised through bond issues. Warsh noted that 'credit flows have been robust, particularly for businesses.'