In this March 3, 2020 file photo, Federal Reserve Chair Jerome Powell speaks during a news conference to discuss an announcement from the Federal Open Market Committee, in Washington. (AP Photo/Jacquelyn Martin, File)
By Martin Crutsinger
The Federal Reserve announced a significant change Thursday in how it manages interest rates by saying it plans to keep rates near zero even after inflation has exceeded the Fed’s 2% target level.
The change signifies that the Fed is prepared to tolerate a higher level of inflation than it generally has in the past. And it means that borrowing rates for households and businesses — for everything from auto loans and home mortgages to corporate expansion — will likely remain ultra-low for years to come.
The new goal says that “following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time.”
The new Fed policy sought to underscore its belief that a low jobless rate was good for the economy by saying it would seek to assess the “shortfalls” in employment from the maximum level.
In a speech detailing the changes, Chairman Jerome Powell made clear that the policy change reflects the reality that high inflation — once the biggest threat to the economy — no longer appears to pose a serious danger, even when unemployment is low and the economy is growing strongly. Rather, Powell said, the economy has evolved in a way that allows the Fed to keep rates much lower than it otherwise would without igniting price pressures.
“The economy is always evolving,” Powell said. “Our revised statement reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities and that a robust job market can be sustained without causing an unwelcome increase in inflation."
In his speech, Powell said that the Fed's decision to allow unemployment to fall to a 50-year low before the pandemic had played an important role in lifting the fortunes of low-income workers.
General Motors reported its Q4 earnings Tuesday. While chip shortages impacted sales and revenue last quarter, Paul Jacobson, GM Chief Financial Officer, told Cheddar chip availability has gotten better since Q3. This is crucial as GM has pivoted its focus toward electric vehicles. It recently announced it will be building a new battery plant in Michigan, making $35 billion in EV investments, and producing a million electric vehicles by 2025.
Google’s philanthropy arm, Google.org, recently announced a $10 million grant for the AARP Foundation to aid in teaching digital skills to low income older workers. As the implementation of hybrid work expands, a greater emphasis is being placed on helping workers 50 years old and up — especially among women and people of color — to be digitally literate in order to keep the workplace generationally diverse. Lisa Marsh Ryerson, president of the AARP Foundation, joined Cheddar News to talk about the curriculum of the partnership. "Those of us who are 50 and older are not digital natives, so we do have a learning curve that we have to address," she noted.
AT&T announced earlier today it is spinning off its media properties in WarnerMedia in a merger with Discovery in a $43 billion deal.Scott Rostan, founder and CEO at Training The Street, joined Cheddar to talk about what the unwinding of the telecom giant's Time Warner media properties means for investors. "I think the investor sentiment is they're digesting the new information, and they're looking into the dividend, especially the reduction of the dividend," said Rostan, noting the transaction allows AT&T to focus on its core telecommunications business.
Greg Bishop, Senior Writer for Sports Illustrated, joins Cheddar News' Closing Bell, where he says Tom Brady's legacy is all about 'progress' and expects the future Hall of Famer to bolster his entrepreneurial ventures following his retirement.
Anthony Saccaro, Founder and President of Providence Financial, joins Cheddar News' Closing Bell, where he elaborates on why he is excited that the market is beginning to rebound and believes February has the potential to be a good month after a turbulent January.
A 2021 report from UK Research and Innovation found that the shipping industry makes up at least 2.5 percent of the world's total CO2 emissions. It's a problem that energy solutions company, Leclanché, is trying to solve. Founded in 1909, the company has been developing and producing batteries for more than 100 years. Today, Leclanché's lithium-ion battery is used to electrify not just ships, but also railroad locomotives, trucks, and specialty vehicles. Cheddar News spoke with Pierre Blanc, chief technology and industrial officer of Leclanché, to discuss.
Amazon is betting that ammonia could be the fuel of the future, participating in a Series A round for the Brooklyn-based company Amogy in December. Amogy aims to de-carbonize transportation with a clean energy system that uses ammonia as a renewable fuel. Amogy is partnering with Amazon on its first commercial product - an ammonia-powered cargo-shipping vessel. Amogy CEO Seonghoon Woo joins Cheddar Climate to discuss.
