The Federal Reserve is expected to keep the benchmark interest rate steady at its two-day meeting on September 19 and 20.
The data will determine whether policymakers’ economic forecasts issued at the end of that session still point to another increase in interest rates by the end of 2023, and to begin cutting them in 2024. The US central bank’s target interest rate was raised to a range of 5.25 percent – 5.50 percent of near zero in March 2022.
The following is a guide to some of the numbers that shape the policy debate, according to a Reuters report:
– Inflation expectations (issued on September 15 – next release on September 29):
Consumer estimates of average inflation over the next 12 months and the next five years fell significantly in September, the University of Michigan reported. Over a one-year horizon, inflation expectations fell to 3.1 percent from 3.5 percent in August. In five years, the reading fell to 2.7 percent from 3.0 percent.
The declines will be a relief to Federal Reserve officials who worry that rising inflation expectations could cause consumers to behave in ways that would keep actual inflation higher.
– Retail Sales (released September 14 – next release October 17):
Retail sales rose more than expected in August, up 0.6 percent. While that was largely due to higher gasoline prices, a separate measure of sales that is more directly linked to economic output also rose slightly despite economists expecting it to decline. Even with previous months’ sales falling, the August report showed that household spending still likely added to overall economic growth which had been on the central bank’s radar as an inflationary risk.
– Producer Prices (released on September 14 – next release on October 11):
The producer price index for August jumped 0.7 percent, the largest monthly increase since the height of the Federal Reserve’s inflation fears in June 2022. Commodity prices rose 2 percent, another reason the central bank will hold back. Announcing the end of the inflation battle. Another reason for this jump is the rise in fuel prices. The service industry price index rose just 0.2 percent, and a measure of retail and wholesaler margins fell, strengthening arguments that inflation should continue to fall.
– Inflation (issued on September 13 – next issue on September 29):
Consumer price inflation rose for the second month in a row, to 3.7 percent in August versus 3.2 percent in July, but the rise was largely the result of higher gas prices, which can be volatile, and which Federal Reserve officials discounted in an analysis. Price trends. More importantly for the central bank, “core” inflation, stripped of energy and food costs, has continued to fall; It decreased to 4.3 percent on an annual basis compared to 4.7 percent in July.
The personal consumption price index, which is used to set the Federal Reserve’s 2 percent inflation target, rose to 3.3 percent in July from 3 percent in June. The “core” rate, which is stripped of food and energy costs, rose 4.2 percent in July compared to 4.1 percent in June.
While the overall picture is somewhat mixed, the inflation data since the Fed’s last meeting likely does not change the policy outlook, but it does highlight how long it may take for Fed officials to be confident that inflation will continue to decline.
– Employment (released September 1st – next release October 6th):
The US economy added 187,000 jobs in August, more than economists expected, a sign of continued labor market strength, but the August report also contained evidence that a slowdown is underway. Previous months’ gains were revised lower; Job growth in June showed just 105,000 jobs, while the unemployment rate rose to 3.8 percent from 3.5 percent as more people joined the labor market.
Hourly wages grew 4.3 percent year-on-year, but only 0.2 percent month-on-month, the smallest such jump this year.
Investors viewed the overall data as leaning toward any further increases in federal interest rates.
The August jobs report is one of the last major data that the Federal Reserve will release before its next policy meeting.
– Job Opportunities (released August 29 – next release October 3):
The Department of Labor’s Job Vacancies and Labor Turnover Survey is closely monitored for information about the imbalance between labor supply and demand, especially about the number of job openings per person without a job, but looking for one. During the coronavirus pandemic, there have been roughly two jobs for every job seeker. This percentage decreased with the slowdown in raising interest rates by the Federal Reserve. Labor market demand, by July, had fallen to 1.5 to 1, its lowest level since September 2021. Levels around 1.2 were considered tight for the US labor market before the pandemic.
– Banking statements (issued every Thursday and Friday):
To some extent, the Federal Reserve wants credit to become more expensive and less available. This is how his policy increases affect economic activity, but the bank failures in the spring threatened broader industry pressures and a worse-than-expected credit crunch. Weekly data on bank lending shows that bank credit has declined year-on-year since mid-July.
Bank borrowing from the Federal Reserve remains high, but has been steady on a weekly basis.
2023-09-17 17:03:48
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