8/22/2023 0 Comments Point and click time commandoStill, if inflation and the labor market show signs of cooling down sufficiently by the Fed’s mid-June meeting, as many economists expect, Fed officials appear inclined to halt the rate increases. That likely would have been a more emphatic preference for a pause. The central bank stopped short of stating that rates are probably high enough to lower annual inflation to the Fed’s 2% target, as some economists anticipated. Is a recession coming?: Is a recession coming? Most corporate economists don't see a slump happening within a year. See the surge in rates over time: Credit card, mortgage and auto: See how much Fed interest rates have affected how much you pay How the rate hike will impact you: Federal Reserve's on track for one more rate hike. “In determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time, the Committee will take into account” its rate hikes so far, the lags with which they affect the economy and inflation, and “economic and financial developments.” Instead, it said its policymaking committee “will closely monitor incoming information and assess the implications for monetary policy. In a statement after a two-day meeting, the central bank removed previous guidance that “some additional policy firming (rate hikes) may be appropriate” to lower yearly inflation to its 2% target. The Federal Reserve raised its key short-term interest rate by a quarter percentage point Wednesday and signaled it could now pause if inflation continues to ease as expected. Shares of PacWest Bancorp slumped about 2%, New York Community Bancorp dipped 3.4% and Western Alliance Bank faded 4.4%.Īs stocks settle after the trading day, levels might still change slightly.WASHINGTON − The Fed’s most aggressive rate-hiking campaign in 40 years may be history. Shares of regional banks continued their slide Wednesday. The market's declines come a day after the Dow fell over 360 points, as investors grew fearful that that the banking turmoil has not been contained even after JPMorgan Chase's purchase of failed lender First Republic Bank. "The markets and our economy will continue to live in purgatory until inflation is closer to the Fed’s target rate of 2%. I can’t envision any sustainable market rally until inflation is tamed," said Eric Sterner, CIO at Apollon Wealth Management. Still, inflation remains far from that goal - which doesn't bode well for Wall Street. Powell also maintained the Fed's inflation target of 2%. That could leave investors wondering if Fed officials are "making it up as they go along," said Matthew Tuttle, CEO and CIO of Tuttle Capital Management. Still, the central bank maintained that future rate decisions "will be driven by incoming data meeting by meeting."įed Chair Jerome Powell remained coy on questions about recession concerns, stating that it's still possible to avoid a recession but that he doesn't "want to characterize the staff's forecast for this meeting." Stocks fell Wednesday after the Federal Reserve raised rates by an expected quarter point and opened the door to pausing rates later this year. Traders work at the New York Stock Exchange on May 3, in New York City. The case of having a recession, I don't rule that out either: It's possible that we will have what I hope would be a mild recession." He added: "It's still possible that the case of avoiding a recession is, in my view, more likely than that of having a recession. I fully appreciate that would be against the pattern." "It's possible that we can continue to have a cooling in the labor market without having the big increases in unemployment that have gone with many prior episodes," he said. It wasn't supposed to be possible for job openings to decline as much as they've declined without unemployment going up, he said. Job openings remain high - the March Job Openings and Labor Turnover Survey showed there were 1.6 available jobs for every job seeker - and there are indications of gradual cooling in the labor market, he said. "We've raised rates by 5 percentage points in 14 months, and the unemployment rate is 3.5%, pretty much where it was or even lower than it was when we started," Powell said. The US labor market's continued resiliency in the face of a barrage of interest rate hikes makes a soft landing still a possibility, Federal Reserve Chair Jerome Powell said Wednesday.
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