11/11/2023 0 Comments Next fed rate hike![]() Atlanta Fed President Raphael Bostic this week said his base case is that rates will remain high through 2024. 13 to 14 meeting minutes show no central bank policymaker expected any rate cuts for all of 2023. That view remains in contrast to where Fed officials insist they are heading: Not just a bit higher, but with a bias to remain there for the potentially extended period of time it may take for inflation to slow credibly toward the Fed's target. 1 meeting and a pause just below 5%, with rate cuts priced in for later in the year. Traders of futures tied to the Fed's policy rate bet heavily on a downshift to quarter-percentage-point hikes starting at the Jan. ![]() stocks rose after the release of the CPI data. ![]() If anything, he said, recent data on economic activity has delayed the risk of recession. The economy continues adding jobs even as growth slows, Barkin noted. Inflation is too high, and we will need to stay on the case until it is sustainably back to our 2% target," Barkin said in comments to the Virginia Bankers Association. Still, Fed policymakers remain aligned around further hikes - whatever the size - and a final destination somewhere above 5%. The debate over that could be even more intense.But, after a year in which he was an outspoken advocate for larger increases, Bullard did not push back against smaller increases moving forward. Tang said the Fed will have to decide how to balance keeping inflation running at 2% with full employment, meaning everyone who wants a job gets one. He also thinks disagreement is healthy.īut if the economy starts to stall and inflation is still above the central bank’s two percent target, Tang said officials will have to ask themselves, “Is it really worth slowing down the economy more to get inflation back down to that 2% level when the labor market is starting to weaken and you might put people out of work?” Interest rate decisions could get even tougher for Fed officials, said Derek Tang, an economist at LH Meyer. “People are assessing the same conditions slightly differently and I think that’s a completely normal thing to happen at this kind of turning point,” Owen said. The central bank is at a turning point, deciding when to stop pushing up interest rates and how long to keep them elevated. “A two percentage point spread in terms of what people feel would be the appropriate policy setting - that’s big,” he saidīut it’s perfectly normal to have disagreement now, said another former Fed economist, Ann Owen. ![]() Kuttner said they range from almost 3% to more than 5%. Kuttner, who worked at the Fed for more than ten years, said, “I cannot recall a time when we have seen such wide disagreement in terms of the appropriate monetary policy setting.”Īt last month’s meeting, the Fed released officials’ predictions for where interest rates are headed over the next few years. Brainard did not say how much she thinks the central bank should raise rates at its next meeting.įed watchers like former Fed Economist Ken Kuttner are trying to make sense of it all. “Inflation remains high and policy is going to need to remain sufficiently restrictive for some time to make sure it gets down to 2% for a sustained basis,” Brainard said. But she stressed the central bank isn’t letting up. In her own speech last Thursday, Fed Vice Chair Lael Brainard acknowledged there are a “range of views” on some aspects of inflation. Several others said they would vote for a smaller 0.25% rate hike. Two regional Fed bank presidents argued for a 0.5% increase like the one in December. The Fed’s debate over how high interest rates should go at its next meeting spilled out in public last week. There are disagreements over the direction of the economy - and how the Fed should respond. Federal Reserve officials acted pretty much in lockstep last year as they kept voting to raise interest rates in an effort to cool off the economy and douse inflation.īut some cracks are appearing in that united front as the Fed prepares for another interest-rate meeting next week.
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