May 16, 2022 — Powell Confirmed to Second Term as Fed Chairman


Fed Chair Jerome Powell was nominated to a second 4-year term last week.  His primary role now is trying to tame inflation that is running at a 40-year high. Powell said Thursday the Fed is prepared to act aggressively to bring inflation down to its 2 percent target. He signaled further 0.5 percent increases are likely to happen until the bank is confident inflation is slowing.  Powell admitted they should have started raising rates sooner and is clear price stability needs to be restored.

The war in Ukraine, global supply-chain disruptions and rising commodity prices are adding complications to the Fed’s goal of an economic soft landing versus triggering a recession.  Consumer prices were up 6.6 percent in March, while unemployment is near a 50-year low at 3.6 percent. Historically, when inflation exceeds 4 percent and unemployment is below 4 percent, a recession has occurred in the next two years.

Recession is not a certainty, but higher rates are. Take the time to review your upcoming financing obligations and the opportunity to buy interest rate hedges to help you lock in the low rates that are available now. The Fed will be raising rates again next month at their June 14-15 meeting.