Sunday Review Business
Americans are getting ready for football, family, and food on Thursday. However, investors waited until Wednesday afternoon to start giving thanks.
That’s because the Federal Reserve released the minutes from its latest meeting at 2pm ET Wednesday, which provided more clues about the central bank’s thinking on inflation and interest rate hikes.
The meeting took place on November 2, Fed raised rates by three-quarters of a percentage point — its fourth straight hike Such a huge magnitude. But Fed Jerome Powell, chair, suggested to a press conference that Fed It is possible that hikes will slow down in the near future.
It was evident from the minutes of that meeting that there were several others Fed policymakers agreed with Powell’s assessment.
“A number of participants observed that, as monetary policy approached a stance that was sufficiently restrictive to achieve the Committee’s goals, it would become appropriate to slow the pace of increase in the target range for the federal funds rate,” The Fed Those words were spoken in the minutes.
The Fed Added that “a substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate.”
Stocks rose following their release, after they were initially flat and meandering. The Dow finished the day up more More than 95 points or 0.3% The S&P 500 jumped 0.6% and the Nasdaq rose 1%.
Other Fed Members, including Lael Brainard, the vice chair, hinted in recent speeches at a slower pace for hikes. But there have been some confusing signals from other sources. Fed officials, who have continued to stress that inflation isn’t going away and must be brought under control.
This is why the Fed Inflation remains, it was stated in the minutes “stubbornly high” “more persistent than anticipated.”
With this in mind, traders now price in a more There is a 75% chance of the Fed At its December 14 meeting rates will be raised by just a half-point according to futures contracts on the CME. That’s up from odds of 52% for a half-point hike It was lower than the 85% probability of a half point increase as compared to a month ago. This information was priced in last week.
According to recent inflation reports, the rate of price increases is slowing. more manageable levels. Although the employment market is relatively healthy, most recent figures on jobless claims have increased from a week ago.
As long as inflation pressures are low and the labor market is stable, however, it will be a good thing. Fed It will likely reduce the size of its offerings rate hikes.
Experts are becoming more concerned about the possibility of a global economic crisis. Fed Rate increases go too far, and could eventually slow down the economy, leading to higher unemployment, job loss, and even a recession.
The Fed’s rate Housing market has seen a significant decline due to rising mortgage rates and price hikes.
Wall Street continues to grow more You can be confident that Fed A soft landing might be possible. The Dow gained 14% in October. This was its highest month since January 1976. The Dow is up 4.5% in November, and is down only 6% for the year.