9/27/2023 0 Comments Twitter stock forecast 2025Headline inflation may be a little higher then than it is today, reflecting energy cost changes, but there is little Fed policy can do about that. Markets though have their doubts with just five basis points of tightening priced for that September FOMC meeting with it being a 50-50 call whether there will be a 25bp hike by the November FOMC meeting.ĭata flow likely to mean September FOMC meeting is another "pause"īy the time of the 20 September FOMC meeting we will have had two further job and inflation reports, a detailed update on the state of bank lending plus more time for the lagged effects of the already enacted Fed tightening to be felt. Chair Powell again referred to the extra rate they included in their June forecast update, which would take the policy rate range to 5.5-5.75% and stated that intermeeting data was broadly consistent with their expectations. Instead the Fed stuck with its hawkish bias with the press conference suggesting that the Fed’s mindset remains focused on ensuring that inflation returns to target sustainability even if that runs the risk of a recession. Given low unemployment, robust wage growth and the fact that core inflation is still running at more than double the 2% target, such a market reaction would run counter to the Fed’s aims. Treasury yields and the dollar would have fallen significantly, which would loosen financial conditions in the economy. A dovish tilt would have led the market to latch onto the possibility of the Fed not hiking further. With two months until the next meeting there was no need for the Fed to change its position. No room for relaxation when inflation is so high
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