We’re going to talk about interest rates in a second. But let’s talk about credit cards first.
News here: Senate Judiciary Committee Chair Dick Durbin (D-Ill.) said Tuesday night he’s facing “resistance” from major players in the credit card market after calling on the CEOs of United Airlines, American Airlines, Mastercard and Visa to testify.
Back in February, Durbin announced that he wanted CEOs of those four companies to testify in an April hearing on “credit card competition,” with a deadline to respond set for March 4. Banks are strongly opposed to Durbin’s Credit Card Competition Act, and they’ve gotten a nice lift from the airline industry in this fight.
We asked Durbin Tuesday evening whether he’d heard back from the airlines about his request. Durbin told a group of reporters he’d experienced “resistance from them to bring their CEOs in.”
“CEOs are too busy, they say,” Durbin added. Durbin also confirmed the companies had offered other executives to testify. When we asked whether that’d be acceptable, he replied: “No.”
Representatives for United and American declined to comment.
Staff familiar with the hearing’s planning say that Mastercard and Visa have presented similar resistance to Durbin. Spokespersons for both companies declined to comment about the hearing on the record.
Back to central banking: The Federal Open Market Committee announces its next interest rate move this afternoon.
We know we say this a lot, but the news conference today with Fed Chair Jay Powell will be a big one for economy watchers.
Price hikes for the American consumer have been slowing for months from the inflationary highs of 2022. But progress against inflation has become bumpier in recent weeks, with consumer price data coming in hotter than expected and shelter costs remaining stubbornly high.
More importantly, core inflationary dynamics have been changing in 2024. Inflation for physical goods has come down as supply chains have unsnarled over the last two years. But services inflation — better known as the prices folks charge for skilled labor — has proven to be stickier.
Powell told reporters in January that the Fed would need to see more progress against services inflation. “It’s a reasonable assumption that, over time, goods inflation will flatten out — probably approximate zero,” Powell said. “That would mean the services sectors would have to contribute more.”
Washington and Wall Street are acutely interested in when the Federal Reserve will start to cut interest rates — which Fed officials have said they’d like to do this year.
So exactly how Powell addresses these concerns today is going to shape how we think about inflation and the broader economy for the next several months. That’ll have big implications for the upcoming presidential election.
— Brendan Pedersen
