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.
Jared C. Bass, senior director for Higher Education at the Center for American Progress, joins Cheddar News to discuss how schools are navigating the Omicron variant.
Martin Fischer, president of technology supplier for cars and commercial vehicles ZF North America, joined Cheddar to discuss the company's solutions for next-generation mobility in autonomous vehicles and its plans to usher in the next phase of electric vehicles. He also talked about the rising demand for self-driving technology on a global scale. "Whereas we are really active also there for passenger cars and commercial vehicles, what we showcase at CES now virtually is our autonomous shuttles," he said. "So, what that means is we bring these vehicles to busy city centers and can take traffic levels down."
Pfizer and BioNTech are working to develop an mRNA-based shingles vaccine following the success of the COVID-19 shot. This latest collaboration will mark the third time the pharmaceutical companies have worked together on a vaccine.
On Monday, President Biden announced his new plan to take on inflation by taking down the big meat monopolies - turning to the federal government's antitrust authorities to investigate the major meatpackers that control a significant share of the market. The White House plans to devote one billion dollars to aiding independent meat and poultry producers in an effort to undercut the few powerful meat producers that have control of the sector. Austin Frerick, deputy director of Thurman Arnold Project at Yale, joins Cheddar News to discuss.
Flight cancellations remain high nearly two weeks after the Christmas holiday, with more than 1,400 counted on Tuesday. Carriers are facing a number of factors including staff shortages linked to COVID-19 spread as well as inclement weather.
SGH, formerly known as Smart Global Holdings, reported Q1 earnings after the bell on Tuesday. The holdings company reported solid net sales, up a whopping 60 percent from the same period last year, marking its seventh consecutive quarter of year-over-year revenue growth. SGH also announced a two-for-one share split in the form of a share dividend of one ordinary share for every one ordinary share owned. Mark Adams, CEO, SGH and Former President, Micron, joined Wake Up with Cheddar to discuss.
For the first time in 90 years, General Motors has officially been dethroned as the top car seller in the U.S. after Toyota sold 2.3 million vehicles last year. Paulina Likos, an investing reporter at U.S News & World Report, said that the Japanese auto giant's 2021 success is linked to its large stockpile of semiconductor chips that allowed it to continue producing vehicles while others lagged behind. Likos noted that both GM and Toyota noted that this is unlikely to be a long-term trend and pointed to both automakers' push to become EV leaders. "I think what's great in this EV market is that there are so many different competitors, and certainly both GM and Toyota are trying to be leaders in this space," she said.
