Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Powell tees up slower December hike, but says still way to go until peak rates

Economy Nov 30, 2022 01:39PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters

By Yasin Ebrahim

Investing.com -- Federal Reserve Chairman Jerome Powell said Wednesday that the pace of rate hikes is likely to slow, but the peak level of rates will be higher than previously expected as there is a long way to go to curb above-trend inflation.

"Moderating the pace of rate increases may come as soon as the December meeting," Powell said in a speech on Wednesday at the Brookings Institution event in Washington. He added that the Fed's monetary policy was approaching "the level of restraint that will be sufficient to bring inflation down." 

The Fed chairman, however, pushed back against market bets for a sooner rather than later pause on rate hikes, saying that the peak level of rates, or the terminal rate, will need to be “somewhat higher than thought at the time of the September meeting and Summary of Economic Projections."

About 70% of traders expect the Fed to slow rate hikes to 50 basis points in December, down from 75 basis points seen in the prior four Fed meetings.

“We continue to expect the FOMC to slow the pace of rate hikes to 50bp in December and to 25bp in February, March, and May, raising the funds rate to a peak of 5-5.25%,” Goldman Sachs said in a note ahead of Powell’s remarks.

The latest core personal consumption expenditures price index, the Fed’s preferred gauge of inflation, at 5% remains well above the Fed’s 2% target.

The Fed has taken aim at the labor market in its fight against inflation, hoping that tighter monetary policy measures will help cool demand by enough to keep a lid on wage growth, and ultimately inflation. 

Powell flagged core services, which excludes housing and covers a wide range of services from health care, education to hospitality as an important category of core inflation, and stressed that rising wages were a key driver of upward pressure. 

"Because wages make up the largest cost in delivering these services, the labor market holds the key to understanding inflation in this category," Powell said.

Fresh labor market data due Friday is expected to show that unemployment in November crept higher as more people entered the labor market.

"We expect nonfarm payrolls increased by 180,000 in November with an uptick in participation from 62.25% to 62.34%, which lifts the unemployment rate from 3.7% to 3.8%," Morgan Stanley said in a note.  

The likely path for higher for longer interest rates isn't expected to tip the economy into a deep recession, according to the Fed chairman.     

"I continue to believe that there's a path to a soft-ish landing," Powell said, loosely defining it as the labour market softens but doesn't go into recession, and inflation starts to come down.

Powell tees up slower December hike, but says still way to go until peak rates
 

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 (42)
Tyler Hixon
Tyler Hixon Dec 01, 2022 10:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
wow...... this is getting a bit out of hand... this fed will be viewed as a crash course in how not to handle this in the future. stop raising rates at this point. Crashing us into a recession now after they allowed crazy inflation to soar the year earlier.
David Ly
David Ly Dec 01, 2022 6:36AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The reality is we have to pick one of the two will happen, 50bps or 75bps. 50 is a win even if it was predicted weeks ago.
Levan Jackson
Levan Jackson Dec 01, 2022 6:36AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I don't see smaller hikes for longer as a win. It gives me the impression that they very well know exactly how high they'll have to raise rates and just aren't willing to say out loud.
Dave Jones
Dave Jones Nov 30, 2022 5:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It's gone up basically 7k points in 7 weeks on the basis of a lower rate hike. It's still going to be a rate hike!
Levan Jackson
Levan Jackson Nov 30, 2022 5:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
a rate hike that has been priced in for weeks no less.
David Ly
David Ly Nov 30, 2022 5:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you a bot? Dave
Kerry Ditto
Kerry Ditto Nov 30, 2022 4:52PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It is really stupid to see that today market cheers the guy who is about to pour ashes on Santa cake.
nils Hullmann
nils Hullmann Nov 30, 2022 4:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
so to transalte f you average guy on mainstreet we let inflation run loose.....can fill your gas tank...dont worry soon there wont be any ad blue
Brad Albright
Brad Albright Nov 30, 2022 4:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
No more ad blue? Awww, shucks.
Kerry Ditto
Kerry Ditto Nov 30, 2022 4:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Market should have cried and tanked today.
Luke Knoep
Luke Knoep Nov 30, 2022 4:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why
Kerry Ditto
Kerry Ditto Nov 30, 2022 4:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
When was the last time Fed hikes 50 bps in December? Not that I know of. How can they raise interest rate in December holiday season? It is like pouring ashes on the Santa cake.
Levan Jackson
Levan Jackson Nov 30, 2022 4:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
when was the last time inflation was this high? that's the last time they probably had a rate hike in December.
Brad Albright
Brad Albright Nov 30, 2022 4:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If only there was some great collection of the world's data at our fingertips to which we could turn for information instead of wallowing in ignorance. Then we might come to know that the fed has raised rates in December many times, most recently in 2018.
Kerry Ditto
Kerry Ditto Nov 30, 2022 4:17PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
50 bps hike this December would be the first in my memory. This 50 bps hiking is no good at all. Market should have tanked today.
Dave Jones
Dave Jones Nov 30, 2022 4:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Is this the pivot?
Levan Jackson
Levan Jackson Nov 30, 2022 4:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yeah, the pivot into undoing everything that the rate hikes to date haven't even accomplished yet. I don't know what Powell was thinking saying what he said the way he said it.
MAP SR
MAP SR Nov 30, 2022 4:10PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This is a joke. ha ha ha ha ha ha ha
 
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