BlackRock's Rick Rieder suggests that the Federal Reserve can now end its inflation fight as the labor market in the US is cooling down after gaining 26 million jobs in the past three years.
The Federal Reserve is considering whether to raise interest rates even higher to combat inflation, but some policymakers, like Raphael Bostic, believe it is unnecessary and advocate for keeping the rates at their current level until 2024.
Jeremy Siegel, known as the "Wizard of Wharton," believes that the US stock market is in a good position due to receding inflation threats, and that the housing market is resilient as investors view both as valuable hedges against inflation. Additionally, a softer labor market could delay the Federal Reserve's interest rate hike until December.
New research suggests that elevated interest rates may not have been the main cause of the decline in inflation, sparking a debate about whether the Federal Reserve needs to raise rates again.
Central banks' efforts to combat inflation by raising interest rates have not led to mass job losses, as labor markets in various countries have cooperated by reducing open vacancies and trimming wage growth, suggesting a possible "soft landing" for the economy without significant casualties.
The Federal Reserve faces the challenge of bringing down inflation to its target of 2 percent, with differing opinions on whether they will continue to raise interest rates or pause due to weakening economic indicators such as drops in mortgage rates and auto sales.
The Federal Reserve officials signal that they believe they can control inflation without causing a recession, with forecasts of higher economic growth and unchanged inflation outlook.
The Federal Reserve's measure of inflation is disconnected from market conditions, increasing the likelihood of a recession, according to Duke University finance professor Campbell Harvey. If the central bank continues to raise interest rates based on this flawed inflation gauge, the severity of the economic downturn could worsen.
Federal Reserve policymakers Governor Michelle Bowman and Boston Fed President Susan Collins expressed the need to keep interest rates elevated to combat inflation, with Bowman suggesting further rate hikes will likely be needed to bring inflation down to the Fed's 2% target and Collins stating that further tightening is not off the table as progress in battling inflation has been slow.
Federal Reserve Governor Christopher Waller reiterates the central bank's determination to reduce inflation to its 2% target, without commenting on the economic outlook or his view on monetary policy.
The CEO of Starwood Capital Group, Barry Sternlicht, predicts that the Federal Reserve will be forced to lower interest rates due to the high cost of paying off the government's debt pile, and warns that other Western central banks may follow suit or resort to printing money to cover deficits.
Despite a significant decrease in annual inflation growth in Australia, there are calls for the Reserve Bank to raise interest rates, which would be unjustified and detrimental to low- to middle-income earners.