The Fed decides to wait and see

The Indicator from Planet Money

NPR

Business

4.7 • 9.2K Ratings

🗓️ 15 June 2023

⏱️ 9 minutes

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Summary

The Fed just announced a pause on interest rate hikes for the first time in over a year. With inflation still double the Fed's 2% target, what's the plan here? Today on the show, how a shower helps explain the Fed's incremental approach.

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Transcript

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0:00.0	NPR.
0:07.0	Big news today from the Federal Reserve's top economists.
0:15.8	It comes from a group officially known as the Federal Open Market Committee, which you
0:19.7	can basically think of them as the Jedi Council of Fed Economists.
0:23.9	They're the ones who, for the past 15 months, decided to raise interest rates to fight
0:27.9	inflation, and in fact voted to do that 10 times in a row.
0:32.3	But today, that all changed, because for the first time since March of last year, they
0:37.8	decided to do nothing to leave interest rates where they are.
0:43.5	This is huge.
0:45.1	And not least because it makes a huge break from what you've been hearing on the indicator
0:49.1	for the last year and of it.
0:53.1	Jerome Powell, the chair of the Federal Reserve, the US Central Bank.
0:56.2	The US Central Bank raised interest rates today.
0:58.7	Announce that the Fed was raising interest rates by 24% of the Fed raised interest rates
1:04.6	by a quarter of the percentage of points.
1:09.0	But no more, at least for now.
1:17.7	And on the one hand, this is encouraging news.
1:20.3	It's a sign that inflation is continuing to cool down.
1:23.9	But remember that inflation is still uncomfortably high.
1:27.2	I mean, inflation is double the 2% target that the Fed wants.
1:31.9	And it would be totally understandable to be, I don't know, a little impatient.
1:37.6	Like, why is this taking so long?
	...

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