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.
Kevin Book, Managing Director at Clearview Energy Partners, breaks down the factors that impact the price of gas and what this means for renewable energy initiatives.
Kelsey Sutton, streaming editor at Adweek, talks about the offers going on during Disney+ Day and what the entertainment giant is doing to boost subscriber growth.
We are just one day away from what has been called the most influential tech event in the world. CES 2022 will officially kick off on Wednesday in Las Vegas, but the annual tech summit is being impacted by COVID-19, like so many other recent events. The Consumer Technology Association originally planned for a hybrid event to take place from January 5-8, with some in-person events and some virtual; however, a few big-name companies announced they will not be attending in-person, so the CTA decided to shorten the event by one day, with it now ending on Friday. Consumer electronics senior analyst Will Greenwald joins Cheddar News' Closing Bell to discuss.
Stocks closed mixed Tuesday, with the Dow hitting a record close, but the tech-heavy Nasdaq remained under pressure as bond yields continue to rise. Meanwhile, the S&P 500 closed lower, just shy of a record high. Nancy Prial, Co-CEO & Senior Portfolio Manager of Essex Investment Management joins Cheddar News' Closing Bell to discuss today's close, market predictions for 2022, and more.
This year - for the first time in five years - store openings might actually top announced store closings. Reports show that we're seeing companies opening up new locations by the dozens, and by the hundreds. The need for customers to touch and feel its' products is only one factor in the equation. John Harmon, senior analyst at Coresight Research, joins Cheddar News' Closing Bell to discuss.
Harry Yeh, Managing Director at Quantum Fintech Group, joins Cheddar News' Closing Bell, where he explains why his firm has a target estimate of $400,000 for Bitcoin this year.
California's new composting law will affect what residents do in their kitchens. As of this week, Californians will have to recycle excess food in an effort to reduce emissions caused by food waste. Cities and counties will turn recycled food into compost or use it as a renewable energy source. California's new law is the largest mandatory residential food waste recycling program in the country. Rachel Wagoner, Director of the California Department of Resources, Recycling and Recovery called the law 'the biggest change to trash' since recycling started in the 1980s. She joined Cheddar Climate to discuss.
Like the big changeover to e-commerce for retail, the COVID-19 pandemic has moved car buying trends to the digital showroom. Karl Brauer, an executive analyst at iSeeCars.com, joined Cheddar to talk about the "mindset shift" in consumers and businesses to order-based systems in the United States (something more common in other countries). While more than 60 percent of consumers still prefer to visit dealerships in-person, Brauer noted that consumers are better off ordering a car to spec, which would also help improve supply constraints. "It's really bad right now to be building cars and not really knowing who's going to buy them or when they're going to sell," he said. Manufacturing a car to order would maximize the efficiency of obtaining materials through the supply chain rather than "shotgunning it" at dealerships.
Mark MacDougall, attorney and former prosecutor with the criminal division of the Department of Justice, joined Cheddar to discuss the fraud conviction of Theranos founder Elizabeth Holmes. MacDougall addressed Holmes' stance that what she did was no different than any other Silicon Valley startup's approach to business and how this will shake out for the industry going forward. "I can't imagine it doesn't have some salutary effect on entrepreneurs and people involved in new ventures going forward," he said. Holmes was found guilty on 4 of 11 counts, with each carrying a maximum of 20 years in prison, but MacDougall explained that the lengthy prison sentences were unlikely.
