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Fed Chair Jerome Powell Appears to Promise Continued Rate Hikes in Ongoing Inflation Battle (VIDEO)

2022 Has Been the Worst Year for Inflation in Decades

The combination of excess money printing, the pandemic and the Russia-Ukraine war has caused inflation to spike to levels not seen since the 1980s. To combat inflation, the Federal Reserve has resorted to raising interest rates, with Fed chair Jerome Powell recently indicating that the central bank will continue its aggressive rate hike strategy for the foreseeable future.

Another primary cause of inflation has been rising oil prices, which spiked sharply when Russia, one of the world’s largest oil producers, invaded Ukraine. The rest of the world responded by boycotting most Russian products, including its energy.

As the price of oil rose, virtually all other goods increased in price as well, leading to fears of runaway inflation and significant damage to the economy. The Federal Reserve, long the arbiter of controlling inflation, responded predictably: by raising interest rates.

The Federal Reserve, led by chair Jerome Powell, didn’t just raise interest rates a single time; the Federal Reserve has raised interest rates four times thus far in 2022, including a 0.25% raise in March, a 0.5% raise in May and a 0.75% raise in both June and July. Cumulatively, rates have gone up 2.25%, the highest total increase in a single year since 1994.

Source: CNBC Television YouTube

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The raises are not over yet, though. On September 8th, in a Q&A session with libertarian think tank Cato Institute, Powell stated:

“History cautions strongly against prematurely loosening policy. I can assure you that my colleagues and I are strongly committed to this project, and we will keep at it until the job is done.”

The timing of this statement is notable, as this was Powell’s last scheduled public appearance before the Federal Reserve’s next meeting on September 20th. Powell’s stance is unlikely to change in the next two weeks, so another raise is likely coming.

It appears that the market has already priced in further raises, as Powell’s comments have had no significant impact on the market as of yet. Indeed, according to the CME Group’s FedWatch, which tracks fed funds futures, the market believes there is an 86% chance of a 0.75% raise.

Whether this raise will be the one to bring inflation under control finally or if another will be needed is not yet known. We should have a clearer picture over the coming months. We likely won’t have an answer until the market digests the future raise and we see updated inflation numbers.

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Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.

Shawn V.

Shawn is Marine veteran, originally from the San Francisco Bay Area. Shawn has a BS in Hospitality Management and an MBA, from the University of Nevada. In addition to writing for Wealthy VC, Shawn is also a writer for the financial website Seeking Alpha. Seeking Alpha | Email

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