What Will It Take for the Fed to Stop Hiking?
Another month, another big rate hike.
As expected, the Federal Reserve increased benchmark interest rates by 75 basis points at its meeting Wednesday. That’s the fourth consecutive time the central bank has done so this year in its bid to tackle persistently high inflation.
So when will it end?
It’s the question everyone is asking now that the Fed is eight months into its tightening campaign . Federal Reserve Chair Jerome Powell sent a mixed message Wednesday, saying that there are more hikes to come and rates are probably going higher than people thought. However, he also said the pace of hikes may slow as soon as the next meeting as the central bank takes into account the delayed effect of its moves.?
Stocks initially jumped, then slumped .
Some background: The Fed began raising interest rates in March to cool the economy and bring inflation down. However, the most recent consumer price index reading was higher than expected , job openings are increasing and the economy is expanding — just the opposite of the cooldown the Fed wants to see.?
Yet at the same time, the hikes have pushed down prices in the stock, bond and housing markets as investors worry the rate increases will tip the economy into a recession, an outcome that some view as inevitable .?
Wednesday’s meeting was especially crucial since market watchers got more insight into the Fed’s future plans. Powell said they’re aiming for tightening that’s “sufficiently restrictive” to return inflation to 2% — a long way from the current 8.2%.
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— Claire Ballentine
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Control Room Operator and Engineering Student
2 年It amazes me how every month the Fed has to reaffirm its commitment to raising rates and despite this, every month analysts predict the Fed will suddenly pivot given a new batch of negative real time economic data. They won't because their metrics are backward looking. The Fed is going to fly us right past that narrow runway and crash us into the valley below. This will happen because they aren't looking out the windshield of the plane but instead at their GPS that isn't updating fast enough.
Monitoring And Evaluation Specialist at Shiraz University of Medical Sciences
2 年Hello dear (( Bloomberg NEWS Team)) Thank you for sharing this informative and insightful post. Thanks a lot. ????????? #shibainu #onedollar ?????????
Masters Degree (MAOM) | Lean Six Sigma Green Belt
2 年When unemployment becomes high enough. There’s no secret, the chairman has already outlined what it will take. Unfortunately, this may be a longer road than expected.
Finance Professional with 10+ experience in Finance, FP&A, Financial reporting, Managerial accounting, Management, Banking, FinTech, E-commerce, B2B, IFRS, KPI, Budgeting, Controlling
2 年USA 3.75-4.0 % UK 3.0 % EU 2.0 % The race continues...