Editorial Board
The Fed Needs to Keep Hiking Despite SVB Turmoil
There’s no good reason to go slow on interest rates.
It doesn’t mean retreat.
Photographer: Philip Pacheco/Bloomberg
Last week, after hawkish testimony from Federal Reserve Chair Jerome Powell, markets penciled in a half-point increase in interest rates following the central bank’s next policy meeting. On Friday, the run on Silicon Valley Bank and subsequent fears of a wider crisis changed many investors’ minds. Some bet that the Fed would forgo further rate hikes entirely this year.
The latest inflation figures suggest that would be a mistake. The need to keep pressing down on demand hasn’t gone away, and the SVB fiasco shouldn’t deflect the Fed from the goal Powell outlined: getting the inflation rate back down to its stated goal of 2%.