How Long Should Powell Keep Raising Interest Rates? Fed Officials Are Divided – WSJ

In the past nine months, Jerome Powell has raised interest rates at the fastest pace of any Federal Reserve chair since the 1980s, triggering a market rout, bringing the housing market to a standstill and prompting fears of an imminent recession. That was the easy part.

When inflation was hitting 40-year highs, Fed officials were unanimous that rates needed to rise aggressively. Now cracks are beginning to emerge among them over how stubborn inflation has become and what they should do about it.

Some expect inflation to cool steadily next year and want to stop raising rates soon. Others worry inflation won t ease enough next year, a scenario that calls for raising rates higher or holding them at that level for longer, boosting the chance of a sharp downturn.

That leaves Mr. Powell with the challenge of charting the next stage of interest-rate policy. He faces two difficult questions: how high to raise rates from here, and how long to hold them at that level to conquer inflation.

via www.wsj.com