The Federal Reserve is losing its power to influence the US economy, according to Wall Street economist Richard Koo, potentially requiring higher interest rates to drive inflation down and leading to a selloff in stocks and bonds.
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 US economy may face disruption as debts are refinanced at higher interest rates, which could put pressure on both financial institutions and the government, according to Federal Reserve Bank of Atlanta President Raphael Bostic.
The Federal Reserve has sold about $1 trillion of its bond holdings without causing strains in financial markets, as part of its balance sheet reduction program.
The Federal Reserve's quantitative tightening program, which involves reducing its balance sheet, has not had a significant impact on the market so far, as private sector participants have taken over its role in the Treasury market; however, there is still a risk to banking reserves if money market funds stop buying T-bills.
The Federal Reserve is expected to maintain its benchmark interest rate and may not cut it until the second quarter of 2024 or later, according to economists in a Reuters poll.
Traders and investors are betting that the Federal Reserve will hold interest rates steady at its September meeting, indicating a shift in the market's interpretation of good economic news, as it suggests the Fed may be close to pausing its rate hike cycle despite inflation being above target levels and potential headwinds in the economy.
The Federal Reserve is expected to announce a pause on interest rate hikes due to positive economic indicators and the likelihood of a "soft landing" for the economy, but future decisions will be influenced by factors such as the resumption of student loan payments and a potential government shutdown.
The dollar strengthens and stocks decline as the Federal Reserve delivers a "hawkish pause" during the Fed meeting, with updates on the interest-rate decision, dot plot, and Jerome Powell press conference.
The Federal Reserve has decided to pause interest rates while closely monitoring economic data, particularly unemployment and wages, as concerns about a potential recession and inflation remain.
The Federal Reserve has paused its interest-rate hike campaign, but this decision provides little relief to debt-ridden Americans as credit card rates have surged to a new record of 20.71%, making it harder for individuals to pay down their debt.
The Federal Reserve has paused its campaign of increasing interest rates, indicating that they may stabilize in the coming months; however, this offers little relief to home buyers in a challenging housing market.
