Two Federal Reserve officials have suggested that the central bank may leave interest rates unchanged at its next meeting in three weeks
WASHINGTON — Two Federal Reserve officials suggested Monday that the central bank may leave interest rates unchanged at its next meeting in three weeks because a surge in long-term interest rates has made borrowing more expensive and could help cool inflation without further action by the Fed.
Since late July, the yield, or rate, on the 10-year U.S. Treasury note has jumped from around 4% to about 4.8%, a 16-year high. The run-up in the yield has inflated other borrowing costs and raised the national average 30-year mortgage rate to 7.5%, according to Freddie Mac, a 23-year high. Business borrowing costs have also risen as corporate bond yields have accelerated.
Philip Jefferson, vice chair of the Fed's board and a close ally of Chair Jerome Powell, said in a speech Monday to the National Association for Business Economics that he would “remain cognizant” of the higher bond rates and “keep that in mind as I assess the future path of policy.”
U.S. stock prices reversed their losses after Jefferson's comments. The S&P 500 was up 0.5% in late trading.
Jefferson's comments followed a speech to the NABE earlier in the day by Lorie Logan, president of the Federal Reserve Bank of Dallas and a voting member of the Fed's rate-setting committee. She also indicated that higher long-term bond rates could help serve the central bank's efforts to slow inflation to its 2% target.
Since March of last year, the Fed has raised its benchmark short-term rate 11 times, from near zero to roughly 5.4%. The rate hikes have been intended to defeat the worst bout of inflation in more than 40 years. But they
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