![]() Some experts argue that the Fed should halt raising rates lest it cause further damage to the financial sector. A change in the central bank's policy statement suggested that it could at long last put an end to its tightening campaign. ![]() And there's some reason to think the Fed's quarter-point rate hike in early May was the last one of the cycle. Should the Fed pause in its rate-hiking campaign, that would represent a definitive change in policy. Stocks With the Highest Dividend Yields in the S&P 500 Fed Chair Jerome Powell has said the central bank's decision will be "data dependent," so it's really up to forthcoming economic data to play ball. ![]() By the same token, traders bet there was a 64% chance of the Fed hiking by another quarter of a percentage point. The FOMC has raised the short-term federal funds rate 10 consecutive times, but now it's possible the central bank will enact what is being called a "hawkish pause."Īs of May 27, interest rate traders assigned a 36% probability to the FOMC keeping the fed funds rate unchanged at a target rate of 5.0% to 5.25%. (Pro tip: as closely scrutinized as the Fed statement might be, market participants are usually even more keen on what the Fed chair has to say in the press conference.)Īs for the next Fed meeting, it begins on June 13 and will end with a policy statement on June 14 at 2 pm Eastern. The Fed chief then holds a press conference at 2:30 pm. These meetings last two days, and conclude with the FOMC releasing its policy decision at 2 pm Eastern time. True, the March jobs report revealed the slowest pace of hiring in more than two years, but the 236,000 increase in payrolls was still well above the 183,000 monthly average recorded between 20.Īnd let's not forget that the February jobs report and the January jobs report also blew away economists' and market participants' expectations.įor the record, the central bank's rate-setting committee is called the Federal Open Market Committee (FOMC).Īs you can see from the FOMC meeting calendar below, the committee meets eight times a year. The April jobs report topped economists' expectations by a wide margin, and the unemployment rate ticked down to a level last seen since 1969. Most importantly, there's the labor market, which remains far too robust for the Fed's comfort. ![]() A separate survey of professional forecasters by the Federal Reserve Bank of Philadelphia projects real GDP growth of just 1.3% this year.įor context, in the decade prior to the pandemic, GDP grew at an average annual rate of 2.3%. The GDP outlook for 2023 is unquestionably downbeat too, with some forecasters putting the probability of recession at 60% or greater. The economy expanded at an annual rate of 1.1% during the first three months of 2023, down from the 2.6% growth seen in the final quarter of 2022. Gross domestic product decelerated once again in the first quarter, hurt by high inflation, rising interest rates and turmoil in the banking sector. After all, retail sales have declined in four of the past six months.Īnd then there's the bigger picture. It's also still too soon to call the all-clear sign for consumers. Other data are likewise complicating the Fed's mission.Īlthough U.S consumers showed some resilience in April, with retail sales rising 0.4% vs a revised 0.7% decline the prior month, spending came in lower than economists' forecast for 0.8% growth. The 11 Most Expensive Cities to Live in the U.S. "In fact, the report showed that inflation remains remarkably sticky, which doesn't correspond to virtually any practical thinker's timeline of when inflation might be expected to start to come down further." "The CPI report continues to depict inflation that is just too high for most people's good, especially the Federal Reserve’s," said Rick Rieder, BlackRock's chief investment officer of Global Fixed Income. The slower rate of inflation, which came in below economists' expectations, should theoretically give the Federal Reserve room to pause its long campaign of interest rate hikes.īut experts say the CPI report doesn't exactly give the Fed a slam-dunk case for putting rate hikes on hold. Inflation cooled moderately in April, with prices rising by less than 5% on an annual basis for the first time in two years, according to the CPI report. Meanwhile, the economic data aren't conclusively helping the case for lower interest rates – even as rate increases put stress on the banking sector and threaten to push the economy into recession. The 15 Most Expensive Housing Markets in the U.S.
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