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Fed Set to Raise Rates by 75 Basis Points Next Month - WSJ

Economy Oct 21, 2022 09:12AM ET
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© Reuters

By Geoffrey Smith

Investing.com -- The Federal Reserve is set to raise its key interest rates by 75 basis points for the fourth meeting in a row in November, according to The Wall Street Journal.

Citing sources familiar with the Fed's thinking, the WSJ said that the pace of further rate hikes after that will be less clear.

The Fed has raised the target range for fed funds to 3.25% this year, its highest since the Great Financial Crisis of 2008, in an effort to bring down inflation that has hit a sequence of 40-year highs. However, in recent days, there have been the first signs that at least some members of the Federal Open Market Committee want to slow the pace of monetary tightening, fearing an overshoot.

Guessing the timing of the Fed's 'pivot' to an easier policy stance has been the overarching priority of financial markets for the last couple of months. In that time, consensus forecasts of where Fed rates will peak have risen from around 3.5% to 5% currently - a reflection that inflation is proving much more difficult to control than previously thought.

The last reports on the consumer price index and personal consumer expenditures both showed broad price rises across the basket of goods and services, with inflation in a shelter, food, and energy remaining big concerns. However, pockets of weakness in price trends have become more apparent, with house prices stalling and prices for consumer durables in particular weakening.

Kansas City Fed President Esther George and her Chicago counterpart Charles Evans have both warned of the risks of overshooting this week, although they both supported keeping policy restrictive in the near term.

Such concerns are likely to be reflected in the Fed's guidance at the next meeting, but the WSJ concluded that for the time being, the majority is still in favor of keeping with the current pace of rate hikes until there is a visible improvement in inflation. Most, such as Chair Jerome Powell and vice-chair Lael Brainard have both leaned heavily on the vague expression that policy will have to remain restrictive "for some time."

More specifically, Fed Governor Lisa Cook had said on Thursday that: "Policy must be based on whether we see inflation actually falling in the data, rather than just in forecasts," a comment that raised eyebrows among economists who argued that monthly data are often a lagging indicator of underlying trends.

Fed Set to Raise Rates by 75 Basis Points Next Month - WSJ
 

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Comments (7)
The Writer
The Writer Oct 21, 2022 10:42AM ET
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Wish the FED would think outside the box and not be so text book! This environment is like no other. We dont have a demand problem we have a supply and energy problem! 2% inflation? How about we acheive 4% first and not ***the economy.
Quique DB
Iridescent Oct 21, 2022 10:42AM ET
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No energy problems. The FED problem is too much printing…
Me comment
Me comment Oct 21, 2022 10:19AM ET
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why wait on the rate increases sooner done quicker inflation will get under control.
Oct 21, 2022 10:09AM ET
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so is it a big achievement for US that markets are rising?
Wrong Franco
Wrong Franco Oct 21, 2022 10:09AM ET
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Fed soften their position, a 75 point rise is expected, nothing really hawkish here other than fed's strong talk and secretly picking undervalued stocks.
Robert Linkesch
Robert Linkesch Oct 21, 2022 10:01AM ET
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We will support strong 💪 USD ✌️
David Beckham
David Beckham Oct 21, 2022 9:53AM ET
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Always have some fake news
animus advertere
animus advertere Oct 21, 2022 9:52AM ET
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No wonder the fed has zero credibility. Look at the manipulation. With corruption like this it will take years, not months, for the bottom.
Elezabeth Thomas
Elezabeth Thomas Oct 21, 2022 9:37AM ET
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Unidentifiable parts welded together.
 
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