Fed Chair Says Consumer Credit Market Is Normal
September 22, 2023—The Federal Reserve kept its main rate, the Federal Funds Rate, unchanged on Wednesday at 5.25 percent. Fed Chair Jerome Powell said there was unanimous support among board members for keeping rates steady. He predicted one more rate hike before the end of the year then declining rates beginning next year.
“Now we’re fairly close, we think, to where we need to get. It’s just a question of reaching the
right stance,” he said at a press conference on Wednesday.
Specifically, Powell estimated the federal funds rate would reach 5.6 percent by the end of the year, come down to 5.1 percent in 2024, then further decline to 3.9 percent in 2025.
The rate impacts mortgages, consumer credit as well as interest the government pays on the U.S. debt. The current rate reflects concern among central bankers that the inflation rate in the United States is 3.7 percent—still moderately high considering the target rate is 2 percent.
Consumer Credit
Powell said there are no signs of stress in the consumer credit market at this time.
“Consumer distress, measures of distress among consumers were at historic lows quite recently, you know, during and after the pandemic,” he said. “They’re now moving back up to normal. We’re watching that carefully. But at this point, these readings are not at troublingly high levels. They’re just kind of moving back up to what was typical in the pre-pandemic era.”
