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08-30-22 | News

Federal Reserve Chairman Says Economic Pain is Inevitable

NAHB Reports on Federal Reserve Speech, that the Economy Must Suffer Before it can Bounce Back
by Staff

Forecasters estimate the short-term federal funds rate, which is currently targeted at 2.5% will potentially rise to 4% by 2023.

On August 26th, Federal Reserve Chairman Jerome Powell gave a speech on inflation at the central bank's annual symposium. In his speech, Powell asserted that the Federal Reserve must continue to raise the short-term federal funds rate. Currently with a top target of 2.5%, forecasters only see it rising even higher to potentially 4% by 2023.

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The National Association of Home Builders (NAHB) reported on this speech and noted that the housing sector may already be seeing the results of these economic decisions. Along with the rate increase, so too will economic hardship, but inflation will be lowered. As proof of this, the NAHB points out that housing has already seen a multiple month downtrend. According to NAHB Chief Economist Robert Dietz, once the federal funds rate reaches its high point, it will remain there for at least two quarters. Along with this, the NAHB foresee a rising unemployment rate during the period.

https://www.nahb.org/blog/2022/08/fed-chair-powell-warns-of-inflation-pain

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