WASHINGTON (AP) — The Federal Reserve reinforced its inflation fight Wednesday by raising its key interest rate for the seventh time this year and signaling more hikes to come. But it announced a smaller hike than it had in its past four meetings at a time when inflation is showing signs of easing.
The Fed made clear, in a statement and a news conference by Chair Jerome Powell, that it thinks sharply higher rates are still needed to fully tame the worst inflation bout to strike the economy in four decades.
The central bank boosted its benchmark rate a half-point to a range of 4.25% to 4.5%, its highest level in 15 years. Though lower than its previous three-quarter-point hikes, the latest move will further increase the costs of many consumer and business loans and the risk of a recession.
More surprisingly, the policymakers forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023. That suggests that the Fed is poised to raise its rate by an additional three-quarters of a point and leave it there through next year. Some economists had expected that the Fed would project only an additional half-point increase.
The latest rate hike was announced one day after an encouraging report showed that inflation in the United States slowed in November for a fifth straight month. The year-over-year increase of 7.1%, though still high, was sharply below a recent peak of 9.1% in June.
“The inflation data in October and November show a welcome reduction,” Powell said at his news conference. “But it will take substantially more evidence to give confidence that inflation is on a sustained downward path.”
In its updated forecasts, the Fed’s policymakers predicted slower growth and higher unemployment for next year and 2024. The unemployment rate is envisioned to jump to 4.6% by the end of 2023, from 3.7% today. That would mark a significant increase in joblessness that typically would reflect a recession.
Consistent with a sharp slowdown, the officials also projected that the economy will barely grow next year, expanding just 0.5%, less than half the forecast it had made in September.
In recent weeks, Fed officials have indicated that they see some evidence of progress in their drive to defeat the worst inflation bout in four decades and bring inflation back down to their 2% annual target. The national average for a gallon of regular gas, for example, has tumbled from $5 in June to $3.21.
Many supply chains are no longer clogged, thereby helping reduce goods prices. The better-than-expected November inflation data showed that the prices of used cars, furniture and toys all declined last month.
So did the costs of services from hotels to airfares to car rentals. Rental and home prices are falling, too, though those declines have yet to feed into the government’s data.
And one measure the Fed tracks closely — “core” prices, which exclude volatile food and energy costs for a clearer snapshot of underlying inflation — rose only slightly for a second straight month.
Inflation has also eased slightly in Europe and the United Kingdom, leading analysts to expect the European Central Bank and the Bank of England to slow their pace of rate hikes at their meetings Thursday. Both are expected to raise rates by half a point to target still painfully high prices spikes after big three-quarter-point increases.
Inflation in the 19 countries using the euro currency fell to 10% from 10.6% in October, the first decline since June 2021. The rate is so far above the bank’s 2% goal that rate hikes are expected to continue into next year. Britain’s inflation also eased from a 41-year record of 11.1% in October to a still-high 10.7% in November.
Many economists think the Fed will further downshift to a quarter-point rate hike when it next meets early next year. Asked about that Wednesday, Powell said he has yet to decide how large he thinks the next hike should be. But having raised rates so fast, he said, “we think the appropriate thing to do now is to move at a slower pace. That will allow us to feel our way.”
Powell downplayed any notion that the Fed might decide to reverse course next year and start cutting rates to support growth, as Wall Street investors are expecting.
“I wouldn’t see the committee cutting rates until we’re confident that inflation is moving down in a sustained way,” he said.
Cumulatively, the Fed’s hikes have led to much costlier borrowing rates for consumers as well as companies, ranging from mortgages to auto and business loans. They have sent home sales plummeting and are starting to weigh down rents on new apartments, a leading source of high inflation.
Fed officials have said they want rates to reach “restrictive” levels that slow growth and hiring and bring inflation down to their target range. Worries have grown that the Fed is raising rates so much in its drive to curb inflation that it will trigger a recession next year.
The policymakers have stressed that more significant than how fast they raise rates is how long they keep them at or near their peak.
“It’s far more important to think what is the ultimate level,” Powell said Wednesday.
Powell’s biggest focus has been on services prices, which he has said are likely to stay persistently high. In part, that’s because sharp increases in wages are becoming a key contributor to inflation. Services companies, like hotels and restaurants, are particularly labor-intensive. And with average wages growing at
With many service-sector employers still desperate for workers, Powell said pay growth may remain above what’s consistent with the Fed’s 2% inflation target.
“We have a long way to go,” the Fed chair said, “to get to price stability.”
AP Business Writer David McHugh contributed to the contents of this report.
WASHINGTON– Florida Gov. Ron DeSantis (R) has beaten former President Trump in a hypothetical 2024 match-up for the GOP presidential nomination.
In a nationwide poll conducted by Yahoo News, DeSantis defeated Trump by a 5-point margin with 47 percent of registered voters saying they would support DeSantis compared to 42 percent who said they would again back Trump.
The latest results, taken in the first few days of December, are a polar opposite from a mid-October poll which found Trump ahead by 9 percentage points, with 45 percent to DeSantis’s 36 percent.
In October, 49 percent of Republican voters said they wanted Trump as the nominee over “someone else,” but that number dropped to 41 percent in December.
Conducted from Dec. 1 to 5, the poll surveyed 1,653 U.S. adults and had a margin of error of plus or minus 2.6 percentage points.
WASHINGTON- The House Ethics Committee is investigating Democratic New York Rep. Alexandria Ocasio-Cortez, according to a press release issued by the committee Wednesday.
“Pursuant to House Rule XI, clause 3(b)(8)(A), and Committee Rules 17A(b)(1)(A), 17A(c)(1), and 17A(j), the Acting Chairwoman and Acting Ranking Member of the Committee on Ethics have jointly decided to extend the matter regarding Representative Alexandria Ocasio-Cortez, which was transmitted to the Committee by the Office of Congressional Ethics on June 23, 2022,” it said in a statement.
The committee did not reveal what Ocasio-Cortez is being investigated for, but conservative groups filed multiple complaints against her alleging that she had misused congressional resources. Ocasio-Cortez has also been called into question over her involvement with the Super PAC Justice Democrats.
Minnesota Rep. Ilhan Omar and Michigan Rep. Rashida Tlaib, have also faced similar scrutiny by the Ethics Committee. In a complaint the committee alleged that Omar hired her then-boyfriend and now-husband as a vendor during her 2018 campaign which, if proven true violates rules which prohibit members from using campaign funds for personal use. Tlaib is alleged to have paid herself a salary drawn from campaign funds after being elected to Congress, a violation of the same rule.
WASHINGTON —Nancy Pelosi said Thursday that she will step down as Speaker of the House after Democrats lost control of the House to Republicans in the midterm elections.
Pelosi announced her decision Thursday during a speech on the House floor.
“Now we must move boldly into the future,” the California Democrat said. “The hour has come for a new generation.”
Pelosi’s resignation comes amid revelations that Marjorie Taylor Greene has secured a promise from House leadership to investigate Nancy Pelosi and the Department of Justice regarding the treatment of Jan. 6 defendants, according to a report from the The New York Times.
“For me the hour has come for a new generation to lead the Democratic caucus that I so deeply respect,” Pelosi said Thursday. “And I am grateful that so many are ready and willing to shoulder this awesome responsibility.”
Pelosi has led the House Democrats since 2003, marking the longest leadership run in either party since the tenure of Sam Rayburn, a Texas Democrat, who died in office in 1961. At 82, Pelosi has been a member of Congress for 35 years.
“I have enjoyed working with three presidents, achieving historic investments in clean energy with President George Bush; transformative health care reform with President Barack Obama, and forging the future — from infrastructure to health care to climate action — with President Joe Biden,” Pelosi stated.
House Minority Leader Kevin McCarthy, R-Calif., who is eyeing the speaker’s job after his party captured the majority, did not attend Pelosi’s resignation speech.
WASHINGTON– A growing number of establishment Republicans are warning former president Donald Trump not to run again for president and that if he does, he will not be the GOP nominee.
Responding to disappointing midterm results former Speaker Paul Ryan (R-Wis.), former Florida Gov. Jeb Bush (R) and former Vice President Mike Pence have each said they would not support Trump should he run again in 2024.
“Some people like Trump and some people don’t like Trump,” said former House Speaker Newt Gingrich (R-Ga.). “He’s the most dominant single figure in the party. That’s a fact.”
One of the most outspoken against Trump’s impending formal declaration is Trump’s former Vice President Mike Pence.
“Well, there might be somebody else I’d prefer more,” Pence said last week when asked if he would vote for Trump if he was on the ballot in 2024.
Paul Ryan, who retired from the House in 2019 after multiple high profile disagreements with Trump, says a Trump 2024 run could cost Republicans the White House if he’s on the ballot.
“I think Trump’s unelectability will be palpable by then,” Ryan said. “We all know he will lose. Or let me put it this way: We all know he’s much more likely to lose the White House than anybody else running for president on our side of the aisle. So why would we want to go with that?”
Bush, who unsuccessfully ran against Trump for the GOP nomination in 2016, says he believes its time for “new blood.”
“I believe there will be a yearning for, A, a new generation of leadership in our country in 2024 and, B, candidates that are focused on the future, not necessarily the grievances of the past,” Bush told CNN.
Joe O’Dea, the GOP Senate candidate in Colorado who has seemingly found favor with red voters in a very blue state by distancing himself from Trump also says Trump should not be on the 2024 ballot.
“I don’t think Donald Trump should run again,” O’Dea said on CNN. “I’m going to actively campaign against Donald Trump and make sure that we have got four or five really great Republicans right now. Ron DeSantis, Nikki Haley, Tim Scott, they could run and serve for eight years.”
WASHINGTON– Former President Donald Trump had launched a full on war against one time political ally turned rival, Florida Governor Ron DeSantis.
In a slew of attacks issued from his Save America PAC Trump labeled DeSantis as an “average REPUBLICAN Governor with great Public Relations.”
“Ron DeSanctimonious is playing games! The Fake News asks him if he’s going to run if President Trump runs, and he says, ‘I’m only focused on the Governor’s race, I’m not looking into the future,’” Trump raged. “Well, in terms of loyalty and class, that’s really not the right answer.”
Trump’s newest criticisms toward DeSantis come days after a less than victorious midterm for Republicans where pundits had predicted an easy landslide.
“Governor Ron DeSanctimonious,” the former president said, “an average REPUBLICAN Governor with great Public Relations, who didn’t have to close up his State, but did, unlike other Republican Governors, whose overall numbers for a Republican, were just average—middle of the pack—including COVID, and who has the advantage of SUNSHINE, where people from badly run States up North would go no matter who the Governor was, just like I did!”
Trump went on to claim DeSantis “came to me in desperate shape in 2017—he was politically dead, losing in a landslide.”
“Ron had low approval, bad polls, and no money, but he said that if I would Endorse him, he could win … I said, ‘Let’s give it a shot, Ron,’” Trump said. “When I Endorsed him, it was as though, to use a bad term, a nuclear weapon went off.”
DeSantis, who easily won re-election by nearly 20 percentage points Tuesday night over Democrat Charlie Crist, has issued no public response to Trump’s verbal assaults.
HARTFORD, Conn. — Radio show personality Alex Jones has been ordered to pay an additional $473 million in punitive damages for stating on air his beliefs that the 2012 Sandy Hook school shooting was a government orchestrated hoax.
The ruling came down Thursday by Connecticut Judge Barabara Bellis who ordered Jones to pay the sum in addition to a nearly $1 billion jury verdict issued last month.
The Infowars host was sued by an FBI agent and Sandy Hook victims’ families over his claims that the mass shooting, in which 20 first graders and six personnel were killed, was staged by “crisis actors” to justify stricter gun control laws.
In October six jurors ordered Jones to pay $965 million to the 15 plaintiffs for defamation, infliction of emotional distress and violations of Connecticut’s Unfair Trade Practices Act, which bans deceptive business practices and unfair competition.
Jones has since doubled down on his claims that the case against him was a “witch hunt” and that the suit violated his Constitutional right to free speech.
Jones’ company, Free Speech Systems, which is also named in the suit, is seeking bankruptcy protection.