The US Federal Open Market Committee (FOMC) will decide to slow the pace of interest rate hikes at its meeting on the 14th, but the terminal rate (the ultimate destination of interest rates) is expected to be higher than expected in precedence.
As Fed Chairman Jerome Powell said, this is not an accommodative change, but rather a premature end to the fight to curb inflation, which is more than three times higher than the 2% price target. understand it correctly.
The Fed is widely expected to raise its target range for the federal funds rate by 0.5 percentage point this time from 4.25% to 4.5%, the highest since 2007. The latest quarterly economic forecasts are released alongside the policy decisions, revealing how many more rate hikes officials expect.
A Bloomberg poll of economists pegged the median terminal rate at 4.9% after Powell said the Fed would likely need to hike rates higher than previously expected.
This means that the interest rate is expected to be raised by 0.25 percentage points each at the meetings on January 31-February 1 and March 21 and 22 next year, and interest rates will remain unchanged thereafter. Investor expectations are similar .
A statement containing the policy decisions and quarterly economic forecasts will be released Thursday at 2:00 pm ET, followed by a statement at 2:30 pm ET.
November consumer price index (CPI) data released by the US Department of Labor on Wednesday suggests that inflation may be past its worst, making it easier than ever for the Fed to slow the pace of hikes in taxi. However, Powell is expected to reiterate at the press conference that the Fed will not stop efforts to contain inflation until it is clear that inflation is on track to slow to 2%.
EY-Parthenon Senior Economist Lydia Bousseur commented on the interest rate forecast distribution map (dot chart) shown in the Quarterly Economic Forecast: All eyes will be on what you say,” she said.
news-rsf-original-reference paywall">Original title:Powered to downshift while signaling the highest peak: Guide to Decision Day(extract)
