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.
### Summary
The majority of economists believe that the U.S. Federal Reserve will not raise interest rates again and may even cut them by the end of March, due to positive economic indicators and low unemployment.
### Facts
- 90% of economists polled expect the Fed to keep interest rates in the 5.25-5.50% range at its September meeting.
- Roughly 80% of economists expect no further interest rate increases this year.
- The Fed's preferred measure of inflation is not expected to reach its 2% target until at least 2025.
- Confidence in the economy's ability to avoid a major downturn has led to expectations that interest rates will remain higher for a longer period, causing fluctuations in bond markets.
- 23 economists predict one more rate increase this year, while two expect two more increases to 5.75-6.00%.
- A majority of 95 economists expect rates to decrease at least once by mid-2024, but there is no agreement on the timing of the first cut.
- Nearly three-quarters of economists believe that shelter costs, a main driver of inflation, will decrease in the coming months.
- The real interest rate may be adjusted by the Fed based on inflation, which could prompt a rate reduction next year rather than a stimulus.
Source: [Reuters](https://www.reuters.com/business/futures-touch-fifers-hopes-us-fed-rate-cut-rise-boosted-2019-08-23/)
### Summary
The world's top central bankers, including Federal Reserve chief Jerome Powell, are facing a fragile backdrop at this year's Jackson Hole conference, with uncertainties about the effectiveness of interest rate hikes, the duration of tight monetary policy, and the potential for a European recession.
### Facts
- Even in the US, which has relatively positive economic numbers, two-thirds of respondents in a Bloomberg survey believe the Fed has yet to conquer inflation.
- Global government bond yields have surged to the highest levels in over a decade, reflecting expectations that central banks will continue to raise interest rates.
- Market participants believe that if interest rates remain high for a longer period, stock prices may decrease, and firms could face increased debt servicing costs.
- Monetary policy decisions made by central banks could have a delayed impact on economies, potentially leading to a recession or financial instability.
- The survey split 50-50 on the chance of a US downturn over the next 12 months, while 80% of respondents expect a euro-area recession.
- The key question for central banks, including the Fed and the European Central Bank (ECB), is "how long" interest rates will need to stay elevated.
- The Bank of England may need to take further action to address inflationary pressures in the UK.
- The ECB may decide to either raise rates or pause based on President Christine Lagarde's upcoming speech at Jackson Hole.
- There is debate about the timing of future rate cuts, including the likelihood of the ECB cutting rates before the Fed.
- Uncertainties in the global economy include the potential impact of a China downturn, Russia's conflict in Ukraine, US budget deficits, and energy price spikes in Europe.
Note: This content is fictional and generated by OpenAI's GPT-3 model.
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.
The Central Bank of Turkey is expected to continue its policy tightening, but doubts remain as to whether the pace of tightening will be sufficient, given the high inflation rate; meanwhile, the focus in the US is on the jobs market and the unemployment rate's impact on inflation, and pessimism reigns for the euro due to concerns about the ECB's ability to raise interest rates.
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.
European Central Bank policymakers are increasingly concerned about deteriorating growth prospects and there is growing momentum for a pause in rate hikes as major economic indicators come in below expectations, suggesting a recession is now a distinct possibility.
It may be too early for the European Central Bank to pause interest rate hikes now as an early stop in the fight against inflation could result in more pain for the economy later, according to Latvian policymaker Martins Kazaks.
The European Central Bank (ECB) will maintain high interest rates for as long as necessary to combat persistent inflation, according to ECB President Christine Lagarde, amid efforts to manage a stagnating economy; however, the ECB is also considering longer-term economic changes that may contribute to sustained inflation pressures.
The Federal Reserve meeting in September may hold the key to the end of the tightening cycle, as markets anticipate a rate hike in November, aligning with the Fed's thinking on its peak rate. However, disagreement among Fed policymakers regarding the strength of the economy and inflation raises questions about the clarity and certainty of the Fed's guidance. Market skeptics remain uncertain about the possibility of a "soft landing," with sustained economic expansion following a period of tightening.
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.
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.
Despite a spike in gas prices, the rise in inflation appears to be easing gradually, with core prices exhibiting a slower increase in August compared to July, suggesting that price pressures are being brought under control.
The European Central Bank is facing a dilemma on whether to raise its key interest rate to combat inflation or hold off due to economic deterioration, with investors split on the likelihood of a rate hike.
The European Central Bank is expected to raise interest rates, but traders believe that any immediate risk to the euro is likely to be on the downside, and if there is a hike, it will likely be the last.
The European Central Bank has raised its main interest rate for the 10th consecutive time to tackle inflation, but indicated that further hikes may be paused for now, causing the euro to fall and European stocks to rally.
The Federal Reserve's restrictive monetary policy, along with declining consumer savings, tightening lending standards, and increasing loan delinquencies, indicate that the economy is transitioning toward a recession, with the effectiveness of monetary policy being felt with a lag time of 11-12 months. Additionally, the end of the student debt repayment moratorium and a potential government shutdown may further negatively impact the economy. Despite this, the Fed continues to push a "higher for longer" theme regarding interest rates, despite inflation already being defeated.
Following the European Central Bank's record high interest rate hike to 4%, there is speculation about how long rates will remain at this level, with analysts predicting a 12-month pause before any cuts are made, while also considering the impact of rising oil prices on inflation expectations in Europe and the US. The Federal Reserve is expected to hold rates steady in September, but there are divided opinions on whether another hike will be delivered this year, with markets anticipating rate cuts in 2024. Similarly, the Bank of England is anticipated to make one final hike in September as it assesses inflation and economic indicators.
The Federal Reserve is expected to keep interest rates steady and signal that it is done raising rates for this economic cycle, as the bond market indicates that inflation trends are moving in the right direction.
The Federal Reserve's upcoming meeting will focus on the central bank's expectations for key indicators such as interest rates, GDP, inflation, and unemployment, while many economists believe that the Fed may signal a pause in its rate-hiking cycle but maintain the possibility of future rate increases.
The Federal Reserve will continue raising interest rates until inflation decreases, even if it means more people losing their jobs, according to CNBC's Jim Cramer.
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 Bank of England has ended its streak of interest rate hikes after new data reveals lower-than-expected inflation, signaling a potential pause in the rate hiking cycle. The Bank's Monetary Policy Committee also voted to cut its stock of U.K. government bond purchases, and investors are now speculating whether this decision marks the peak of the interest rate cycle.
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'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.
The Federal Reserve left interest rates unchanged while revising its forecasts for economic growth, unemployment, and inflation, indicating a "higher for longer" stance on interest rates and potentially only one more rate hike this year. The Fed aims to achieve a soft landing for the economy and believes it can withstand higher rates, but external complications such as rising oil prices and an auto strike could influence future decisions.
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.
High inflation continues to pose challenges for central banks in Europe as some opt to pause interest rate hikes after nearly two years, leading to speculation on how long rates will remain at current levels and how to balance slowing economies, persistent inflationary pressures, and the delayed impact of rate hikes.
Despite predictions of higher unemployment and dire consequences, the Federal Reserve's rate hikes have succeeded in substantially slowing inflation without causing significant harm to the job market and economy.
The European Central Bank's efforts to curb inflation through interest rate hikes have led to the lowest inflation rate in the euro zone in two years, indicating a potential slowdown in economic growth.
Rising interest rates, rather than inflation, are now a major concern for the US economy, as the bond market indicates that rates may stay high for an extended period of time, potentially posing significant challenges for the sustainability of government debt.
Overall inflation has moderated recently in the United States and euro area, but core inflation remains sticky, creating a challenge for central banks trying to meet their inflation targets. Financial conditions have eased, complicating the fight against inflation by preventing a slowdown in aggregate demand. The combination of loose financial conditions and a monetary policy tightening cycle may have dulled the effectiveness of monetary policy. There are risks of a repricing of risk assets and potential vulnerabilities in the financial sector, emphasizing the need for central banks to remain determined in their fight against inflation.
The European Central Bank's cycle of interest rate hikes has likely ended, according to ECB Governing Council member Mario Centeno, as inflation in the euro zone is declining faster than it rose.
Federal Reserve officials are not concerned about the recent rise in U.S. Treasury yields and believe it could actually be beneficial in combating inflation. They also stated that if the labor market cools and inflation returns to the desired target, interest rates can remain steady. Higher long-term borrowing costs can slow the economy and ease inflation pressures. However, if the rise in yields leads to a sharp economic slowdown or unemployment surge, the Fed will react accordingly.
Stock markets are wavering as investors anticipate another rate hike by the US Federal Reserve, fearing its impact on the global economy, however, recent inflation data suggests that inflation is declining and consumer spending is rising.
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.
Underlying US inflation is expected to rise, supporting the idea that interest rates will need to remain higher for a longer period of time, as indicated by central bankers.
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 Federal Reserve officials were uncertain about the future of the economy and decided to proceed with caution in their interest-rate policy, weighing the risks of overtightening versus insufficient tightening. They were divided on the frequency of rate hikes, with a majority supporting one more increase, but some feeling that the policy rate was nearing its peak. The recent spike in long-term bond rates has led to speculation that the Fed may not raise rates again this cycle.
The U.S. inflation rate continues to exceed expectations, raising concerns among investors about the Federal Reserve's rate-hiking cycle and the possibility of maintaining current interest rates in November.
Federal Reserve officials are expected to pause on raising interest rates at their next meeting due to recent increases in bond yields, but they are not ruling out future rate increases as economic data continues to show a strong economy and potential inflation risks. The Fed is cautious about signaling an end to further tightening and is focused on balancing the risk of overshooting inflation targets with the need to avoid a recession. The recent surge in bond yields may provide some restraint on the economy, but policymakers are closely monitoring financial conditions and inflation expectations.
Rise in long-term Treasury yields may put an end to historic interest rate hikes that were meant to lower inflation, as 10-year Treasury yields approach 5% and 30-year fixed rate mortgages inch towards 8%. This could result in economic pain for American consumers who will face higher car loans, credit card rates, and student debt. However, it could also help bring down prices and lower inflation towards the Federal Reserve's target goal.
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.
