Powell Set to Rebuff Pressure on Fed as Finance Chiefs Gather

The US Federal Reserve Chairman Jerome Powell is likely to resist behind-the-scenes pressure at international meetings this week to let up on steep US interest-rate hikes that are putting pressure on economies around the world.

The fed’s most powerful monetary tightening since the early 1980s has sent the US currency surging, rocking developing countries that borrowed heavily in greenbacks, and raising the cost of dollar-priced energy and other imports for richer nations grappling with historically high inflation, Bloomberg said Monday.

The steep runup in US rates has also increased the odds of a major mishap in financial markets, as borrowers who took on leverage during a decade or more of easy credit find themselves being pushed to the brink.

Voices of concern are almost certain to be a feature of annual meetings of the IMF and World Bank in Washington this week, set to be the largest in-person gathering of finance ministers and central bankers since the pandemic began.

“Powell will be vigorously questioned at these meetings about the pros and cons of a more gradual hiking trajectory,” said Citigroup Inc. chief global economist Nathan Sheets, who regularly participated in the semiannual gatherings of finance chiefs as a senior Treasury Department official under President Barack Obama.

Powell and his colleagues have shown no willingness to ease up, and look on track to deliver their fourth straight 75-basis-point hike when they meet to set rates next month. With US inflation at its highest level in four decades, they’ve argued it’s in the best interest of the US and economies around the world that they bring price increases to heel.