Fed Chairman Powell held a series of meetings with policymakers a day before the June rate decision

Chairman of the Federal Reserve Board Jerome Powell speaks during a press conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, United States, July 27 2022. REUTERS/Elizabeth Frantz

Join now for FREE unlimited access to Reuters.com

Aug 5 (Reuters) – U.S. Federal Reserve Chairman Jerome Powell had a flurry of activity with fellow rate setters a day before the central bank’s monetary policy meeting in June, when it pivoted at the last minute to a larger-than-expected interest rate hike.

Powell met with two regional federal bank presidents and three board members on Monday, June 13, his monthly schedule released on Friday shows, including a virtual meeting with a member of the Fed’s board of governors for just 10 minutes this that day at 3 p.m. (1900 GMT).

The Fed’s policy meeting was held on June 14-15, with its policy decision being released at the close of the meeting on Wednesday, June 15.

Join now for FREE unlimited access to Reuters.com

Typically, the meetings Powell has with his colleagues in the run-up to political meetings last 30 minutes each. He had a 15-minute meeting with another unnamed board member later that day on June 13. It was the first time he had met with more than two decision-makers on a Monday before a policy meeting since April 2021.

The same afternoon, the Wall Street Journal reported that the US central bank was considering a 75 basis point interest rate hike, which was interpreted as an informal Fed communication and was the catalyst that prompted economists and investors to sharply raise their rate hike forecasts to a Movement level of 75 basis points.

Fed officials previously flagged a half-percentage-point hike as the likely outcome on June 15. The central bank’s own rules prohibit policymakers from publicly commenting on monetary policy within 10 days of interest rate decision meetings.

The Fed ended up raising interest rates at the June meeting by 75 basis points, the biggest hike in more than a quarter century, as it intensified its battle to stifle inflation at its peak. highest level in four decades.

After the meeting, Powell told reporters that the Fed’s hand had been forced in the previous days by “pretty eye-catching” data on inflation expectations, as well as data on price pressures the previous Friday. , and that he had agreed such an outcome with his colleagues prior to the meeting.

Last week, the Fed raised its benchmark overnight lending rate another three-quarters of a percentage point to a target range of between 2.25% and 2.50%. It has raised that rate by a total of 225 basis points since March in an increasingly aggressive effort to stifle stubbornly high inflation even as recession fears gather pace. Read more

Join now for FREE unlimited access to Reuters.com

Reporting by Lindsay Dunsmuir and Ann Saphir; Editing by Leslie Adler

Our standards: The Thomson Reuters Trust Principles.

Leave a Comment