Particle.news
Download on the App Store
16 ARTICLES
·
last wk.

Federal Reserve Signals Policy Shift as Supply Shocks and Inflation Volatility Loom

Chair Jerome Powell highlights potential revisions to the Fed's monetary framework, emphasizing higher long-term rates and improved communication strategies.

Federal Reserve chair Jerome Powell speaking at the Thomas Laubach Research Conference in Washington D.C. on May 15.
U.S. Federal Reserve Chair Jerome Powell attends a press conference, following a two-day meeting of the Federal Open Market Committee on interest rate policy, in Washington, D.C., U.S., March 19, 2025. REUTERS/Nathan Howard/File Photo
U.S. Federal Reserve Chair Jerome Powell attends a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, D.C., U.S., May 7, 2025. REUTERS/Kevin Lamarque/File Photo

Overview

  • The Federal Reserve is reevaluating its 2020 monetary policy framework, with discussions focused on addressing inflation risks and labor market dynamics.
  • Chair Jerome Powell warned of a potential era of more frequent and persistent supply shocks, complicating the Fed's dual mandate of price stability and full employment.
  • Officials are debating a shift from addressing 'shortfalls' in employment to 'deviations,' which could justify rate hikes in tight labor markets.
  • Long-term interest rates are expected to remain elevated, with Powell affirming that the era of near-zero rates is unlikely to return soon.
  • Evolving trade policies and tariff uncertainties are contributing to inflationary pressures, delaying potential rate cuts.