Breaking News
Get 40% Off 0
🔎 See NVDA's full ProTips for an instant risks or rewards Claim 40% OFF

Fed officials flag further hikes even after holding steady

Published Sep 22, 2023 10:45AM ET Updated Sep 22, 2023 02:31PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. U.S. Federal Reserve Governor Michelle Bowman gives her first public remarks as a Fed policymaker at an American Bankers Association conference in San Diego, California, U.S., February 11 2019. REUTERS/Ann Saphir
 
ESXB
0.00%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) -U.S. Federal Reserve officials warned on Friday of further rate hikes even after voting to hold the benchmark federal funds rate steady at a meeting this week, with three policymakers saying they remain uncertain the inflation battle is finished.

Their comments were tempered by words like "patience," and an acknowledgement that price increases have been slowing.

But in the first public comments since the central bank this week agreed to hold its benchmark rate steady in a range of from 5.25% to 5.50%, the emphasis was on the possibility that rates may still rise, and on the fact that monetary policy will likely remain tight longer than previously expected.

"Inflation is still too high, and I expect it will likely be appropriate for the (Federal Open Market) Committee to raise rates further and hold them at a restrictive level for some time to return inflation to our 2% goal in a timely way," Fed Governor Michelle Bowman said in prepared remarks for an Independent Community Bankers (NASDAQ:ESXB) of Colorado event.

"Progress on inflation is likely to be slow given the current level of monetary policy restraint," she said, noting that in policymaker projections issued by the Fed earlier this week inflation remains above the 2% target "at least until the end of 2025."

A potential further rise in energy prices, she noted, was a particular risk worth monitoring.

In separate remarks to the Maine Bankers Association, Boston Fed President Susan Collins said a further tightening of monetary policy "is certainly not off the table," though she also counseled "patience" as the Fed tries to get the right signal from sometimes noisy inflation data.

"It is too soon to be confident that inflation is on a sustainable trajectory back to the 2% target," Collins said, with job growth still "above trend," and elevated inflation in aspects of the service sector still a concern.

"I expect rates may have to stay higher, and for longer, than previous projections had suggested," said Collins.

San Francisco Fed President Mary Daly, considered among the more dovish Fed officials, said she still needed more data to determine whether interest rates should rise again, though she called it "prudent" for the Fed to be patient in future rate decisions.

"The thing that would be a problem is if we decided that we wanted to call it done, we'd say we're done, we say definitely one more, when we actually don't know," she said in an event held in coordination with Greater Phoenix Leadership.

Minneapolis Fed President Neel Kashkari, a voter on rate policy this year, did not talk about his current monetary policy views during an event at the Economic Club of Minnesota, but did say the economy appeared to be motoring along despite the swift Fed rate hikes since March of 2022.

"Consumer spending continues to exceed our expectations," Kashkari said. "I would have thought with 500 basis points or 525 basis points of interest rate increases we would have slammed the brakes on consumer spending, and it has not."

The central bank's decision to hold its benchmark overnight interest rate steady this week was unanimous.

Bowman said she supported it because of "mixed data" that alongside signs of continued "solid" economic growth also included some decline in inflation and evidence of slowing job growth. Collins and Daly do not currently have a vote on rate policy under a Fed system that rotates votes among the 12 Reserve Bank presidents year by year.

New projections issued at the end of a two-day policy meeting on Wednesday showed 12 of 19 Fed officials expect one additional quarter point rate increase this year. The Fed has two scheduled sessions left in 2023, concluding on Nov. 1 and Dec. 13.

More notably, officials projected that while they still expect to begin reducing interest rates next year as inflation falls, the path down will be slower than previously anticipated.

Though opinions are diffuse, policymakers at the median now see only a half percentage point of rate cuts in 2024 versus the full percentage point decline seen in their June quarterly outlook.

Fed officials flag further hikes even after holding steady
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Barry Nickerson
Subbuilder Sep 23, 2023 6:55AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Chickens....they're afraid of somebody. That why they did not raise the rates.
Elbaton Jah
Elbaton Jah Sep 22, 2023 3:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They know very well that they won't let it reach that 2%.🙄
Otis Grant
Otis Grant Sep 22, 2023 2:28PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Who cares they can do another 25 its not going to have any effect on oil prices
Warm Camp
Warm Camp Sep 22, 2023 11:53AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
That’s the plan: pushing inflation down by words and fudged statistics.
James Long
FauxNews Sep 22, 2023 11:01AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
More pain for the middle class and small business but crickets on reigning in the monopolies that are price gouging.
Elvis Durant
Elvis Durant Sep 22, 2023 11:01AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
u ain't kidding
Otis Grant
Otis Grant Sep 22, 2023 11:01AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Of course, that's never the source of inflation
Stephen Fa
Stephen Fa Sep 22, 2023 11:01AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The Russell 2000 index and stock category is going to sink the most.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email