Monetary policy

The Federal Reserve raised its benchmark interest rate by half a percent this week, but chair Jerome Powell said the question now is how long to keep monetary policy tight.

Federal Reserve Chair Jerome Powell said that interest rates could climb less quickly as early as December, but warned that cutting rates "is not something we want to do soon."

The Federal Reserve notched two badly needed wins last week, as inflation showed signs of easing and the financial system withstood the collapse of one of the world's biggest crypto firms. Here's what that means for the central bank moving forward.

The Federal Reserve's semiannual financial stability report said the threat of continued high prices and the Fed's response to them are top threats for banks and other market participants.

In a letter to Federal Reserve Chair Jerome Powell, the chair of the Senate Banking Committee warned that the Fed was in danger of going too far in its efforts to tame inflation.

The central bank has recently stepped up its efforts to reduce its balance sheet, but doing that without forcing a liquidity crunch requires careful planning.

Comments from Federal Reserve officials in Jackson Hole last week have markets bracing for further tightening of monetary policy in the near term.

As the Federal Reserve implemented its second 0.75% rate hike in two months, the chair said the system is able to withstand any financial stability risks that rising rates might create. 

As government debt swells, the outer limits of what the U.S. can safely borrow are becoming less and less clear.

The dot plot will be the star of the meeting, but the coronavirus and the elections will be part of the discussion, economists say.