FILE - In this Monday, Nov. 30, 2015, file photo, Gov. Jerome Powell attends a Board of Governors meeting at the Marriner S. Eccles Federal Reserve Board Building in Washington. On Thursday, March 2, 2017, Powell added his voice to a growing group of Fed officials who are indicating that they may raise rates in March. (AP Photo/Andrew Harnik, File) (AP)

Don't panic: That huge stock plunge isn't the beginning of a recession — it's just the Fed

The Federal Reserve raised its benchmark interest rates a quarter-point, stoking a market nosedive

Nicole Karlis
December 20, 2018 1:53AM (UTC)

On Wednesday, Federal Reserve Chairman Jerome Powell held a press conference — considered particularly auspicious given the ongoing signs that we are in an economic slowdown — in which he announced that the Federal Reserve raised its benchmark interest rates a quarter-point, the fourth raise this year, defying President Donald Trump’s pleas to the central bank not to increase borrowing rates. This marks the highest rate in more than a decade.

“There’s significant uncertainty about the — both the path and the ultimate destination of any further rate increases,” Powell told reporters. “Inflation has still remained just a touch below two percent. So I do think that gives the committee the ability to be patient in moving forward.”


Many investors sold their stocks after the announcement. The Dow Jones industrial average closed down more than 350 points, about 1.5 percent, following a similar trend to every Fed decision Powell has announced since February.

“A little bit of volatility … doesn’t probably leave a mark on the economy,” Powell said, trying to calm the market, emphasizing he doesn’t see a “preset course” for what the Federal Reserve will do.

Powell said the Fed will adjust accordingly to the economy, and that he and his colleagues will raise interest rates if the economy grows faster than expected. Alternatively, they are prepared to lower interest rates if the economy grows slower.


“We will adjust monetary policy as best we can to keep the expansion on track, the labor market strong and inflation near 2 percent,” Powell said.

When asked about being challenged by the White House not to increase interest rates, Powell said: “We’re going to do our jobs the way we’ve always done them.”

Nicole Karlis

Nicole Karlis is a news writer at Salon. She covers health, science, tech and gender politics. Tweet her @nicolekarlis.

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