![]() While inflation has cooled slightly, it remains well above the Fed's 2% target, and Fed officials have warned that rate hikes will continue as long as inflation remains elevated. 13 as the FOMC begins its two-day meeting. CPI data for November is scheduled for release Dec. The consumer price index, the market's preferred measure of inflation, increased 7.7% from October 2021 to October 2022, down from annual growth of 8.2% in September and the peak 9% in June. "They will want the overall message to be hawkish as a 50-bps hike is still a large hike and inflation is still way too high." "This will be a tricky message for Chair Powell and the FOMC as even though they are reducing the pace of rate hikes, they will not want the market to perceive this as a sign they are close to being done with their fight against inflation and there will be more rate hikes next year," said Jason England, global bonds portfolio manager at Janus Henderson Investors. In September, Fed officials projected a terminal rate of 4.6% in 2023, or a target range between 4.5% and 4.75%, but Fed Chairman Jerome Powell has warned that this projection will likely be raised, and most Fed watchers believe it will rise above 5%. It will also update its terminal rate estimate, or the range that officials expect to ultimately bring the benchmark interest rate to. The expected 50-bps hike will push the federal funds rate to a target range of 4.25% to 4.5%, but Fed watchers will be watching closely where central bankers plan to go from there.Īfter the meeting, the Fed will release the quarterly summary of economic projections, a rundown of Fed officials' views of inflation, employment and economic growth. The futures market late last week put the odds of a 50-bps hike at this meeting at roughly 75%, with 25% forecasting another 75-bps hike, according to the CME FedWatch Tool, which measures investor sentiment in the Fed funds futures market. ![]() After keeping rates near zero for roughly two years, the Fed has hiked rates by 375 bps since March, including hikes of 75 bps at each of its last four meetings. ![]() 13-14 meeting, the rate-setting Federal Open Market Committee is expected to announce the benchmark federal funds rate will be hiked by 50 basis points. Federal Reserve officials are widely expected to slow their frenetic pace of rate hikes this week, but they also will likely outline plans to boost interest rates next year to highs not seen in more than 15 years.įollowing their Dec.
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