On The Money — Fed on track to ramp up rate hikes
Federal Reserve Chair Jerome Powell made clear the central bank isn’t waiting around for inflation to fall. We’ll also look at concern from the U.S. over the implications of a European embargo on Russian energy and the latest efforts to aid Ukraine.
But first, Nancy Pelosi wants answers after the Capitol was evacuated Wednesday night.
Powell: Half-percent rate hike ‘on the table’ for May
Federal Reserve Chair Jerome Powell said Thursday the central bank could raise interest rates by twice its typical pace at its May policy meeting as it seeks to curb high inflation.
- Powell said there is broad support among Fed officials to raise the bank’s baseline interest rate range by 0.5 percentage points and expedite a planned series of rate hikes.
- Annual inflation as measured by the Fed’s preferred gauge, the personal consumption expenditures (PCE) price index, hit 6.4 percent in February, more than three times the bank’s target of 2 percent.
- The Fed has typically raised interest rates in 0.25 percentage point increments, but is facing growing pressure to hike quicker as inflation runs at four-decade highs.
“Economies don’t work without price stability. We need that to have a strong labor market for an extended period of time. We need it for financial stability, so we must do that,” Powell said at a panel of top international economic officials hosted by the International Monetary Fund.
“There’s something in the idea of front-end-loading whatever accommodation one thinks is appropriate, so that does add points in the direction of 50 basis points being on the table,” Powell said. One basis point is one one-hundredth of a percentage point.
Sylvan breaks it down here.
Yellen: European ban on Russian energy may do more harm than good
Treasury Secretary Janet Yellen on Thursday raised doubts about how much a European ban on Russian energy imports would hurt the Russian economy.
During a Thursday press conference, Yellen said it was essential for the European Union to end its dependence on Russian oil, natural gas and coal imports — a critical energy supply for Europe and a steady stream of foreign revenue for Moscow. But Yellen said a total embargo on Russian energy imports may do little to hinder Russia’s economy while crippling Europe with staggering price increases.
- Russia provides roughly 27 percent of crude oil, 47 percent of coal and 41 percent of natural gas imported by the E.U. in 2019, according to the European Commission.
- If the E.U. spurned Russian energy imports, European countries would likely pay much more for oil, coal and gas from other nations with new power to set higher prices, Yellen argued.
- And while Russia could no longer sell vast volumes of fuel to Europe, it could sell smaller quantities at much higher prices to friendly or neutral nations.
“Europe clearly needs to reduce its dependence on Russia with respect to energy, but we need to be careful when we think about a complete European ban on, say, oil imports,” Yellen said.
“That would clearly raise global oil prices, it would have a damaging impact on Europe and on other parts of the world, and, counterintuitively, it could actually have very little negative impact on Russia, because although Russia might export less, the price it gets for its exports would go up,” Yellen said.
Sylvan has more here.
Democrats aim to require FTC to investigate possible gas price gouging
Democrats have introduced legislation that aims to require the Federal Trade Commission (FTC) to investigate possible gas price manipulation, as polling shows rising fuel prices have become an issue for many consumers amid an increase in inflation.
Democratic Reps. Val Demings (Fla.), Jerry Nadler (N.Y.), David Cicilline (R.I.) and Kathy Castor (Fla.) unveiled the bill, dubbed the Oil and Gas Industry Antitrust Act, early on Thursday.
- The measure seeks to require the FTC to investigate whether the price of gasoline is being “manipulated by reducing refinery capacity or by any other form of market manipulation or artificially increased by price gouging practices,” the bill text states.
- It builds upon calls that have been made by Democrats and the White House in recent months, asking the FTC to probe whether oil companies have been raising prices illegally at a time the nation is seeing decades-high inflation rates.
- If passed, a congressional aide familiar with talks said the new bill would make it a congressional requirement for the FTC to probe potential gas price manipulation.
Aris has more on this here.
MORE UKRAINE AID
Biden proposes $500 million in aid for Ukrainian government
The Biden administration is seeking to send Ukraine $500 million to help keep its government services running as the war with Russia stretches into its third month, the Treasury Department announced Thursday.
The administration will ask Congress to approve $500 million to cover the cost of Ukraine’s basic government services, including pensions, salaries and aid programs, the Treasury Department said. The aid package would be in addition to another $800 million in military support proposed by Biden on Thursday, which would also require approval from Congress.
- After failing to topple the Ukrainian government, Russia has pivoted to entrenching control of eastern regions of Ukraine that Moscow claims without evidence to be freeing from the genocide of ethnic Russians.
- The latest military package is intended to help stave off Russian advances in the Donbas region in Eastern Ukraine. It includes heavy artillery, dozens of howitzers, 144,000 rounds of ammunition to be used with the howitzers, and more tactical drones, Biden said.
Check out more on this here from Sylvan.
Good to Know
Republicans are warning the Business Roundtable that the group could find itself in hot water with the GOP after it recently called for the creation of a carbon pricing system, a proposal experts have said could help cut planet-warming emissions.
Earlier this week, the business group released a list of policy recommendations to counter rising energy costs, spanning proposals aimed at reducing overall energy demand, upping the nation’s production and export of oil, and accelerating “the clean energy transition.”
Here’s what else we have our eye on:
- Former President Barack Obama blamed tech companies for failing to address the disinformation problem he said the industry has amplified during a speech Thursday at Stanford University.
- The U.S. needs to create a “road map” to the batteries of the future even as it solves existing supply chain issues, experts told a House panel on Thursday.
- Cryptocurrency exchange service Binance has announced that it will deactivate user accounts in Russia amid Moscow’s war with Ukraine.
- CNN is shutting down its paid streaming service just weeks after it launched, the company announced on Thursday.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.
The Hill has removed its comment section, as there are many other forums for readers to participate in the conversation. We invite you to join the discussion on Facebook and Twitter.