Main Topic: The U.S. Federal Reserve's need to raise interest rates further to bring down inflation.
Key Points:
1. Governor Michelle Bowman supports the Fed's quarter-point increase in interest rates last month due to high inflation, strong consumer spending, a rebound in the housing market, and a tight labor market.
2. Bowman expects additional rate increases to reach the Fed's 2 percent inflation target.
3. Monetary policy is not predetermined, and future decisions will be data-driven. Bowman will consider consistent evidence of inflation decline, signs of slowing consumer spending, and loosening labor market conditions.
Main Topic: Federal Reserve officials express concern about inflation and suggest more rate hikes may be necessary.
Key Points:
1. Inflation remains above the Committee's goal, and most participants see significant upside risks to inflation.
2. The recent rate hike brought the federal funds rate to its highest level in over 22 years.
3. There is uncertainty about the future direction of policy, with some members suggesting further rate hikes and others cautious about the impact on the economy.
Experts are divided on whether the US Federal Reserve should raise its interest rate target to 3% to combat inflation and cushion against recessions, with some arguing that raising inflation targets would be futile.
Two Federal Reserve officials suggest that interest-rate increases may be coming to an end, but one of them believes that further hikes may still be necessary depending on inflation trends.
U.S. Federal Reserve Chairman Jerome Powell stated that restrictive monetary policy will continue until inflation slows, and the central bank is prepared to raise rates cautiously; the price of Bitcoin briefly dipped before recovering, while traditional markets saw modest gains.
Fed Chair Jerome Powell reiterated that the Fed's inflation target will remain at 2% and that they are prepared to raise rates further if necessary, despite concerns of an economy that has re-accelerated above expectations.
Cleveland Federal Reserve Bank President Loretta Mester believes that beating inflation will likely require one more interest-rate hike in the U.S. and then pausing for a while, although she may reassess her previous view of rate cuts starting in late 2024, and she aims to set policy so that inflation reaches the Fed's 2% goal by the end of 2025 to prevent further economic harm.
Former White House economist Kevin Hassett predicts that the Federal Reserve will raise interest rates again due to increasing inflation and energy prices.
The former president of the Boston Fed suggests that the Federal Reserve can stop raising interest rates if the labor market and economic growth continue to slow at the current pace.
Atlanta Federal Reserve Bank President Raphael Bostic argues against further U.S. interest rate hikes, stating that current monetary policy is already tight enough to bring inflation back down to 2% over a reasonable period and cautioning against the risk of tightening too much.
The Federal Reserve's preferred inflation gauge increased slightly in July, suggesting that the fight against inflation may be challenging, but the absence of worse news indicates that officials are likely to maintain interest rates.
Bank of Canada Governor Tiff Macklem suggests that interest rates may not be high enough to bring inflation back down to target, emphasizing the need for further restrictive monetary policy to restore price stability.
Dallas Federal Reserve Bank President Lorie Logan believes that while it may be appropriate to skip an interest-rate increase at the upcoming meeting, further policy tightening will likely be necessary to bring inflation down to 2% in a timely manner.
Bond traders are anticipating that the Federal Reserve will continue with interest-rate hikes, and next week's consumer-price index report will provide further insight on how much more tightening may be required to control inflation.
The Federal Reserve should consider cutting its policy rate within the next six months to stabilize real rates and avoid tipping the economy into a recession, as financial stress in the real economy is rising despite slower hiring and inflation cooling, according to economist Joseph Brusuelas.
Rising energy costs are predicted to contribute to an increase in inflation rate, but it is unlikely to prompt the Federal Reserve to raise interest rates, though there may be another rate hike in the future.
The Federal Reserve faces a critical decision at the end of the year that could determine whether the US economy suffers or inflation exceeds target levels, according to economist Mohamed El-Erian. He suggests the central bank must choose between tolerating inflation at 3% or higher, or risking a downturn in the economy.
Economist Campbell Harvey warns that the Federal Reserve should not raise rates later this year, as he believes a recession may occur in 2024 due to an inverted yield curve and potential distortions in Bureau of Labor Statistics and GDP figures.
The Federal Reserve is expected to keep interest rates unchanged as it faces economic and political risks while trying to combat inflation.
The Federal Reserve is expected to keep its benchmark lending rate steady as it waits for more data on the US economy, and new economic projections suggest stronger growth and lower unemployment; however, inflation remains a concern, leaving the possibility open for another rate increase in the future.
The U.S. Federal Reserve kept interest rates steady but left room for potential rate hikes, as they see progress in fighting inflation and aim to bring it down to the target level of 2 percent; however, officials projected a higher growth rate of 2.1 percent for this year and suggested that core inflation will hit 3.7 percent this year before falling in 2024 and reaching the target range by 2026.
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.
At least one more interest-rate hike is possible, according to Federal Reserve officials, who suggest that borrowing costs may need to remain higher for longer in order to address inflation concerns and reach the central bank's 2% target.
The Federal Reserve will continue to raise interest rates as inflation resurfaces, according to Wall Street investor Caitlin Long, with big corporations benefiting while other sectors of the US economy are already in recession.
Federal Reserve Governor Michelle Bowman suggests that further interest rate hikes may be necessary to bring inflation back to the central bank's target of 2%, despite recent data showing slower price increases.
The Federal Reserve may not raise interest rates again this year due to an already uncertain political climate in Washington, as well as a cooling economy, slowing inflation, and potential negative impacts from high interest rates and a government shutdown.
The Federal Reserve is facing a tough decision on interest rates as some officials believe further rate increases are necessary to combat inflation, while others argue that the current rate tightening will continue to ease rising prices; however, the recent sell-off in government bonds could have a cooling effect on the economy, which may influence the Fed's decision.
The US Federal Reserve should proceed carefully when deciding whether or not to hike interest rates further to bring down inflation, according to two senior officials, as they aim for a "soft landing" to tackle inflation without harming the US economy.
Wall Street and policymakers at the Federal Reserve are optimistic that the rise in long-term Treasury yields could put an end to historic interest rate hikes meant to curb inflation, with financial markets now seeing a nearly 90% chance that the US central bank will keep rates unchanged at its next policy meeting on October 31 through November 1.
The report on consumer prices in September shows that inflation remains steady but still poses challenges, leading economists to predict that the Federal Reserve will keep the possibility of a final interest rate increase this year open.
The Federal Reserve is expected to reach its 2% inflation target rate by early 2025 and is unlikely to raise interest rates in the near future, according to Mike Fratantoni, Chief Economist of the Mortgage Bankers Association. Fratantoni also predicts that the 10-year treasury rate will drop below 4% by the end of the year, leading to a decrease in mortgage rates over the next two years. The U.S. government's fiscal policy and debt limit impasse could continue to impact mortgage rates.
Federal Reserve policy makers should establish a longer-term vision for interest-rate policy instead of reacting aggressively to each data point, according to Mohamed El-Erian, chief economic adviser at Allianz SE. He warns that over-tightening monetary policy to reach the inflation target of 2% too quickly could cause damage to the economy. El-Erian hopes that the Fed keeps its benchmark interest rate unchanged for the rest of the year for the sake of economic stability.
Federal Reserve Chair Jerome Powell stated that inflation is still "too high" and the path to reducing it will be challenging, with the Fed remaining committed to bringing it down to 2%. Despite some improvements, inflation remains far from the target, and the possibility of a rate hike in December or future meetings remains open. Achieving the Fed's inflation target will require sustained and constant decreases, which may not be possible until mid-next year. Higher interest rates will lead to increased costs for consumers, impacting their ability to make purchases and potentially causing cutbacks in other areas.
The Federal Reserve may need to increase interest rates further to combat persistent inflation in the US economy, despite the recent surge in Treasury yields prompting investors to question further rate hikes, according to Richard Clarida of Pimco. Clarida also highlighted the challenge of deciding when to start cutting interest rates and predicted that the US dollar will return to a more normal level once rate differentials close.
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