2 Sneaky Ways Fed Chair Kevin Warsh and the FOMC Can Raise Interest Rates Without Adjusting the Federal Funds Rate
Yahoo Finance ·
The last two months have been packed with memorable moments on Wall Street. We've watched the Dow Jones Industrial Average ( ^DJI 0.09% ) , S&P 500 ( ^GSPC 0.05% ) , and Nasdaq Composite ( ^IXIC 0.24% ) launch to record highs, borne witness to the world's largest initial public offering, and observed a rare change in power at the Federal Reserve. May 15 marked the final day of Jerome Powell's second term as Fed chair , while May 22 was the official swearing-in day for his successor, Kevin Warsh. Since the central bank's inception more than 122 years ago, it's only had 17 Fed chairs, including Warsh. Fed Chair Kevin Warsh intends to lead a reform-oriented central bank. Image source: Official Federal Reserve Photo. Warsh's ascension comes at a particularly precarious time for the U.S. economy and Wall Street. The U.S. inflation rate is soaring, and speculation is mounting as to whether he and the other Federal Open Market Committee (FOMC) members will raise interest rates. The FOMC is the 12-person body responsible for setting the nation's monetary policy. However, you might be surprised to learn that Warsh and the FOMC don't have to directly adjust the federal funds target rate to raise interest rates.
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