Fed

The Federal Reserve is expected to raise interest rates by another 0.75 percentage points today, as it tries to control runaway prices.

People have grown more confident of that over the summer as the cost of gasoline — with its highly visible price tag — has fallen. "We will keep at it until the job is done," Powell told an audience at the CATO Institute this month. "The Fed has been delivering a 'tough love' message that interest rates will be higher, and for longer, than expected." While the [price of gasoline has dropped sharply](https://www.npr.org/2022/08/06/1115440553/gas-prices-oil-inflation-cost-of-living) from its record high in June, and used cars and airline tickets have gotten somewhat cheaper, other costs continue to climb, including essentials such as rent, groceries and electricity. The central bank has already raised its benchmark rate four times this year — from near zero to about 2.375%. "If unemployment were to stay under, say 5%, I think we could really be really aggressive on inflation," Waller said. But so far, its actions have done little to curb the rapid run-up in prices. "The longer inflation remains well above target, the greater the risk that the public does begin to see higher inflation as the norm, and that has the capacity to really raise the cost of getting inflation down." "If we don't get inflation down, we're in trouble," Fed governor Christopher Waller said this month. Powell argues that's "The Fed will continue to hike rates until it actually restrains the economy and intends to keep rates at those restrictive levels until inflation is unmistakably on its way to 2%," McBride said. What's more, price hikes have spread to goods and services that are not directly affected by the pandemic or the war in Ukraine, suggesting that inflation has gained momentum that may not be quickly reversed.

The central bank is expected to raise rates by three-quarters of a percentage point for the third consecutive time.

[misjudging inflation](https://www.washingtonpost.com/us-policy/2022/05/31/inflation-economy-timeline/?itid=lk_inline_manual_15) for much of last year, the Fed has been in a race to push past the “neutral” zone of roughly 2.5 percent, where rates don’t slow or juice the economy, and into “restrictive territory” that dampens consumer demand and gets inflation down. Fed officials had hoped that the latest consumer price index report would show a meaningful drop in inflation, thanks in part to falling gas prices. Policymakers are also set to release a new set of economic projections. He is likely to get questions on inflation, the risks of a recession, future rate hikes — and what the toll of those moves will be. [job market](https://www.washingtonpost.com/business/2022/09/02/august-jobs-report/?itid=lk_inline_manual_7) and consumer spending — two crucial economic engines — have stayed resilient through the Fed’s sharp rate hikes, and Americans may even be [feeling better](https://www.washingtonpost.com/business/2022/09/10/economy-inflation-gas-prices/?itid=lk_inline_manual_7) about inflation. “If it’s [one percentage point], I think that would be interpreted as a statement,” said Justin Wolfers, professor of public policy and economics at the University of Michigan.

How much faith Federal Reserve officials still have in prospects for a "soft landing" as they take aggressive action to quash the highest inflation in 40 ...

This week's decision is expected to take the Fed policy rate to a range of 3%-3.25% from the current 2.25%-2.50%. Most penciled in gross domestic product growth of between 1.3% and 2% for each of the next three years. The Fed instead kept the policy rate at near zero until December 2015, when it lifted it by just a quarter of a percentage point. "Recent Fed communications have acknowledged this, in part, by leaning more strongly in the direction of needing to slow labor markets and accepting the risks to activity that come with it." That benchmark, known as the Sahm Rule after former Fed staffer Claudia Sahm who identified and formalized it, says the U.S. Register now for FREE unlimited access to Reuters.com

Investors were finally starting to turn all their attention to Wednesday's interest rate announcement from the Federal Reserve, when geopolitics popped up once ...

interest rates, according to CME's Fedwatch tool, but haven't given up on the Fed "going Swedish" and surprising with a full percentage point hike. The news sent investors rushing to safe havens. Register now for FREE unlimited access to Reuters.com

The World Bank last week raised the specter of a global recession, driven by higher rates in the U.S. and abroad. Investors are increasingly worried that ...

“But if market reform doesn’t proceed quickly enough, there could be a point at which the Fed has to rethink [its actions] in the event the market is not functioning properly.” is a “rolling recession,” where different parts of the economy contract at different times but overall growth never actually decreases. Darrell Duffie, a finance professor at Stanford’s Graduate School of Business, said these issues are caused by larger structural problems in the market. Markets are expecting rates to rise nearly 2 more percentage points by the end of the year. Investors have become increasingly nervous about what that might mean for the Treasury markets where the U.S. will further squeeze a European economy already beleaguered by the war in Ukraine. “We just don’t know if the Fed rate hikes are going to be successful,” said Nancy Davis, founder of hedge fund Quadratic Capital Management. Central banks around the world are also ramping up borrowing costs to battle inflation, which could have an intense cumulative effect on global growth. But the Fed’s policies take time to feed through the economy, meaning the central bank could end up depressing economic activity more than necessary before realizing it, given the sheer speed at which it’s jacking up rates — the fastest pace in three decades. The World Bank last week raised the specter of a global recession, driven by higher rates in the U.S. Fed Chair Jerome Powell has pledged to do whatever it takes to curb inflation, a point that he’ll punctuate on Wednesday when the central bank raises interest rates for the fifth time this year. Investors are increasingly worried that disruption in the U.S.

Jerome Powell takes center stage later today following the conclusion of the FOMC meeting. It's Fed day. Markets are awaiting a decision on interest rates and ...

Therefore, while we may see a lot of choppy trading right when the Fed announces at 1PM CDT, I wouldn’t be surprised to see continued volatility as the market digests the Fed’s full statement. I frequently mention bitcoin as a market confidence indicator and $20K being a threshold between a confident market and a shaky one. Much like we discussed with earnings season, we have a pretty good idea of what to expect today, but the forward looking statements will likely dictate market reaction.

Strategists are looking beyond the key issue of inflation for other potential market metrics that may cause the Federal Reserve to slow its aggressive cycle ...