The majority of economists polled by Reuters predict that the U.S. Federal Reserve will not raise interest rates again, and they expect the central bank to wait until at least the end of March before cutting them, as the probability of a recession within a year falls to its lowest level since September 2022.
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.
Federal Reserve Bank of Philadelphia President Patrick Harker does not believe that the U.S. central bank will need to increase interest rates again and suggests holding steady to see how the economy responds, stating that the current restrictive stance should bring inflation down.
Two officials at the Federal Reserve have expressed differing views on whether or not the central bank should raise its benchmark interest rate again to combat inflation, highlighting the uncertainty surrounding future rate hikes, with more clarity expected from Federal Reserve Chair Jerome Powell's upcoming speech at a Fed conference in Jackson Hole.
Federal Reserve Chair Jerome Powell warned that the fight against inflation still has a long way to go, emphasizing the need for extended periods of elevated interest rates to restore price stability. Powell stated that although inflation has cooled, the improvement may be temporary, and the Fed is committed to lowering inflation to their 2% target.
The president of the Federal Reserve Bank of Philadelphia believes that the US central bank has already raised interest rates enough to bring inflation down to pre-pandemic levels of around 2%.
President of the European Central Bank, Christine Lagarde, stated that interest rates in the European Union will need to remain high to combat inflation, despite progress being made, emphasizing the challenges posed by disruptions in the global and European economies.
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.
The Bank of England may have to increase interest rates if the US Federal Reserve decides to raise rates to cut inflation, in order to prevent the pound from weakening and inflation from rising further.
Top central bankers, including Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde, emphasized the importance of keeping interest rates high until inflation is under control while also grappling with economic challenges and uncertainties at the annual Federal Reserve gathering in Jackson Hole, Wyoming.
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.
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.
The U.S. is currently experiencing a prolonged high inflation cycle that is causing significant damage to the purchasing power of the currency, and the recent lower inflation rate is misleading as it ignores the accumulated harm; in order to combat this cycle, the Federal Reserve needs to raise interest rates higher than the inflation rate and reverse its bond purchases.
Boston Federal Reserve President Susan Collins advocates a patient approach to policymaking and believes that more evidence is needed to determine if inflation has been tamed, stating that the Fed may be "near or even at the peak" for interest rates but further increases could be necessary depending on data outcomes.
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.
The Wall Street Journal reports a notable shift in the stance of Federal Reserve officials regarding interest rates, with some officials now seeing risks as more balanced due to easing inflation and a less overheated labor market, which could impact the timing of future rate hikes. In other news, consumer credit growth slows in July, China and Japan reduce holdings of U.S. Treasury securities to record lows, and Russia's annual inflation rate reached 5.2% in August 2023.
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.
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.
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.
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 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 Federal Reserve's decision to raise interest rates will continue to burden borrowers with higher bills on credit cards, student loans, car loans, and mortgages, while savers are rewarded with higher rates on savings accounts and certificates of deposit.
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.
Central banks, including the US Federal Reserve, European Central Bank, and Bank of England, have pledged to maintain higher interest rates for an extended period to combat inflation and achieve global economic stability, despite concerns about the strength of the Chinese economy and geopolitical tensions.
The Federal Reserve is paying attention to "real" interest rates, which measures rates adjusted for inflation, and is using this to inform its decisions regarding future rate hikes and inflation.
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.
