The U.S. economy is forecasted to be growing rapidly, which is causing concern for the Federal Reserve and those hoping for low interest rates.
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 Federal Reserve faces new questions as the U.S. economy continues to perform well despite high interest rates, prompting economists to believe a "soft landing" is possible, with optimism rising for an acceleration of growth and a more sustainable post-pandemic economy.
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.
Hiking interest rates can discourage innovation and curtail long-term economic growth potential, according to a study presented at the Federal Reserve's annual conference. A percentage point increase in interest rates could lead to a 5% reduction in economic output, suggesting the need for increased government funding for innovation to offset rate increases. Higher interest rates make borrowing more expensive, reducing consumer and business demand and hindering the development of new offerings and efficiency-increasing innovations. Additionally, research and development spending, venture capital investment, and patents all decline with rising interest rates. However, the study does not advocate for refraining from raising rates if needed to control inflation.
U.S. economic growth, outpacing other countries, may pose global risks if the Federal Reserve is forced to raise interest rates higher than expected, potentially leading to financial tightening and ripple effects in emerging markets.
Higher interest rates are impacting corporate profits, but stock prices remain steady for now.
Bank of America warns that the US economy still faces the risk of a "hard landing" due to rising oil prices, a strong dollar, and potential interest rate hikes by the Federal Reserve, contrasting with the optimistic outlook of other Wall Street banks.
Federal Reserve policymakers are not eager to raise interest rates, but they are cautious about declaring victory as they monitor data such as inflation and job growth; most do not expect a rate hike at the upcoming policy-setting meeting.
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.
J.P.Morgan Asset Management predicts that there will be no more interest rate hikes from the U.S. Federal Reserve due to downward-trending inflation data.
Goldman Sachs predicts that the Federal Reserve will not raise interest rates at its upcoming annual meeting due to favorable inflation news and projected economic growth, but they expect a further hike later in the year.
The Federal Reserve is expected to signal that another rate hike may be necessary due to strong economic growth and inflation metrics, creating a difference of opinion between the equity and bond markets.
The Federal Reserve is expected to keep interest rates steady as it waits for more data to gauge the impact of previous rate hikes on the US economy, with factors such as inflation, the job market, and rising energy prices adding uncertainty.
The Federal Reserve leaves interest rates unchanged but projects one more rate hike this year, causing stock markets to slump and Treasury yields to rise; Instacart shares drop, Klaviyo shares rise, and the Writers Guild of America hopes to end a five-month-long strike in Hollywood; CEO Jeffrey Gundlach warns of the "problematic" impact of the recent oil spike on the economy, potentially leading to another interest rate hike by the end of the year; despite concerns, the Fed highlights strong economic growth forecasts and suggests the possibility of the US economy continuing to run hotter than anticipated.
U.S. stocks are expected to open lower and the dollar is soaring after the Federal Reserve indicated that interest rates will remain higher for a longer period, while the Bank of England faces a tough rate decision and the Swiss National Bank has paused its rate-hiking cycle.
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.
Stocks may not be as negatively impacted by higher interest rates as some fear, as the Federal Reserve's forecast of sustained economic growth justifies the higher rates and could lead to increased stock valuations.
The Federal Reserve's plan to raise interest rates to 6% and the looming problem in the US oil supply will likely cause more trouble for the US economy, particularly for small businesses, according to "Shark Tank" star Kevin O'Leary.
The Federal Reserve's decision to hold interest rates and the possibility of rates remaining higher for longer may have triggered a sell-off in the US equities and cryptocurrency markets, with risk assets typically underperforming in a high-interest-rate environment.
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.
Chris Harvey of Wells Fargo Securities believes that the Federal Reserve will no longer increase interest rates, while Tom Kennedy from J.P. Morgan Global Wealth Management advocates for multi-asset investing.
Financial risk strategist Larry McDonald warns that a slowdown in the economy and increasing debt levels may force the Federal Reserve to reconsider its strategy of hiking interest rates, potentially leading to a big debt default cycle next year, and advises investors to shift their focus from growth stocks to hard assets and commodities such as "sexy metals" like uranium and copper, as well as real estate and art.
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.
Billionaire investor Bill Ackman predicts that the Federal Reserve is likely done raising interest rates as the economy slows down, but warns of continuing spillover effects and expects bond yields to rise further.
The Federal Reserve's shift towards higher interest rates is causing significant turmoil in financial markets, with major averages falling and Treasury yields reaching their highest levels in 16 years, resulting in increased costs of capital for companies and potential challenges for banks and consumers.
The Federal Reserve's acceptance of the recent surge in long-term interest rates puts the economy at risk of a financial blowup and higher borrowing costs for consumers and companies.
The U.S. stock market may not deserve to fall due to higher interest rates alone, as the belief that stock prices decline when interest rates rise can lead to erroneous assumptions, and the correlation between interest rates and inflation is crucial in determining stock market behavior.
Despite efforts by Federal Reserve Chair Jerome Powell to curb borrowing and spending habits, many American companies, both investment-grade and sub-investment grade, have continued to borrow more money, potentially indicating that interest rates may need to be raised even higher to effectively break the cycle. Increased borrowing has raised concerns about the financial health and stability of businesses, with indicators of companies' ability to make payments deteriorating. The borrowing spree is primarily a North American phenomenon, as European and Asian companies have added far less debt or decreased their borrowing.
US bank stocks are currently the market's Achilles' heel, as they need to participate in any recovery rally in order to validate the notion that higher interest rates won't lead to a recession next year.
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.
Higher-for-longer interest rates are expected to hinder U.S. economic growth by 0.5%, potentially leading unprofitable public companies to cut their workforce, according to strategists at Goldman Sachs, who also noted that the Federal Reserve's current benchmark rate is insufficient to cause a recession. Additionally, the firm warned that the high rates could increase the U.S. debt-to-GDP ratio to 123% over the next decade without a fiscal agreement in Washington.
Top Federal Reserve officials are considering that tighter financial conditions resulting from an increase in US Treasury yields may replace the need for further interest rate hikes.
Housing trade groups have warned the Federal Reserve that further interest rate hikes could lead to a hard landing in the form of a recession, and have urged the Fed to take two steps to avoid this outcome.
Atlanta Federal Reserve Bank President Raphael Bostic believes that the US central bank does not need to raise interest rates further and does not see a recession on the horizon, despite the slowing economy and falling inflation caused by previous rate hikes. He also emphasized that the recent conflict between Israel and Hamas creates uncertainty and could impact the global economy.
Investors are betting that the Federal Reserve may not raise interest rates again due to recent market moves that are expected to cool economic growth.
Markets are increasingly expecting a Fed pause in interest rate hikes, with the chance of a rate increase in November dropping to 15.8%, down from 23.1% a week ago and 38.4% a month ago, as volatile Treasury yields play a major role in shaping market expectations.
Federal Reserve officials are cautious about raising interest rates further due to the risks of stifling economic growth and increasing unemployment, despite expectations of a potential rate hike, according to newly released minutes from their September meeting.
US corporate bankruptcies are increasing due to higher interest rates set by the Federal Reserve, leading to higher borrowing costs and putting pressure on companies with high levels of debt.
The Federal Reserve will continue with its 'higher-for-longer' interest rate narrative unless there are signs of a slowdown in the consumer sector.
Interest rates are a major focus in financial markets as rising rates have far-reaching consequences, making future projections less valuable and hindering investments, and there is still uncertainty about the full impact of rate hikes on the economy, potentially delaying the start of a recession until mid-2024.
The markets have misunderstood recent statements from Fed officials, leading to the belief that higher interest rates have already done their job, when in fact the Fed may need to raise rates again if the strong US economy continues to drive rates higher.
Federal Reserve Chair Jerome Powell indicated that the strength of the U.S. economy and tight labor markets could warrant further interest rate increases, countering market expectations that rate hikes had come to an end. Powell also acknowledged that inflation is still too high and further rate increases could be necessary.