For the past year or so, that has meant a guessing game over how much the Fed would raise interest rates. Now, the question is not if the central bank will raise rates – an increase of a quarter of a percentage point is almost universally predicted – but whether this is the last hurrah for the Fed’s most aggressive tightening cycle in four decades.
“The real importance of the meeting will be what is said in the statement and the press conference after the meeting,” Dan North, a senior economist at Allianz Trade, said on Friday. “Everyone will be searching for any clues that the Fed has now finished its job and won’t hike any more. The fed funds futures market is leaning heavily that way.”
North added that any change in the language used by the Fed and the subsequent press conference with Chairman Jerome Powell will be subtle, although North believes “the end of the tightening cycle is long overdue, especially since many of the rate hikes haven’t had a chance to fully affect the economy yet. And those that have had the chance, have made a huge impact.”
Among those impacts is a marked slowdown in the rate of the consumer price index – from about 9% a year ago to 3% now – along with a sharp drop in spending by consumers, a cooling labor market and a serious decline in manufacturing activity.
Markets have rallied in advance of the meeting but their gains have been disproportionately influenced by the performance of a handful of pricey tech stocks. Many analysts are warning a pullback is possible given the history that stocks often fall in the months after the Fed signals the end of rate hikes.
Loading…
Source: www.usnews.com
ENB
Sandstone Group
