The Fed is also expected to signal that it is planning more hikes next year than it had previously forecast to try to conquer the worst inflation bout in four decades
After four straight three-quarter-point interest rate hikes, the Federal Reserve is set to announce a smaller half-point increase in its key rate Wednesday, a first step toward dialling back its efforts to combat inflation.
The six rate hikes the Fed has already imposed this year have raised its key short-term rate to a range of 3.75 per cent to 4 per cent, its highest level in 15 years. Cumulatively, the hikes have led to much costlier borrowing rates for consumers as well as companies, ranging from mortgages to auto and business loans. Worries have grown that the Fed is raising rates so much in its drive to curb inflation that it will trigger a recession next year.
“The data kind of fits with our idea that the Fed will downshift further in February,” said Matthew Luzzetti, an economist at Deutsche Bank and a former research analyst at the Fed. “Downshifting helps to maximize their prospects of a soft landing,” in which the Fed’s rate hikes would slow growth and tame inflation but not tip the economy into a recession.
Fed officials have also said they want rates to reach “restrictive” levels that slow growth and hiring and bring inflation down to the their annual target of 2 per cent. In remarks late last month, Powell said he was tracking price trends in three different categories to best understand the likely path of inflation: Goods, excluding volatile food and energy costs; housing, which includes rents and the cost of home ownership; and services excluding housing, such as auto insurance, pet services and education.
As a result, Powell’s biggest focus has been on services, which he said are likely to stay persistently high. In part, that’s because sharp increases in wages are becoming a key contributor to inflation. Services companies, like hotels and restaurants, are particularly labour-intensive. And with average wages growing at a brisk 5 per cent-6 per cent a year, price pressures keep building in that sector of the economy.
Philippines Latest News, Philippines Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Seven people hospitalized due to COVID-19 in P.E.I. from Dec. 3-10, 2022 | SaltWireCHARLOTTETOWN, P.E.I. — Health officials in P.E.I. are reporting that seven people were hospitalized due to COVID-19 from Dec. 3-10. The number of ...
Read more »
Here are the Canada Post shipping deadlines for 2022 holiday seasonThe window to send cards and parcels via Canada Post in time for the holidays will soon be closing, with the first deadline approaching on Dec 16.
Read more »
STOREYS' Real Estate Project of the Year 2022: 8 ElmCongrats to the team behind 8 Elm, STOREYS' Real Estate Project of the Year. CDDevelopments | realestate realestatenews tower projectoftheyear preconstruction preconstructiontoronto condos
Read more »
A 2022 list of best unique gifts for herFrom smaller gifts or bigger buys, here are well-reviewed gifts that should accommodate most budgets.
Read more »
All about Coinbase’s Transparency Report and what the 66% surge in 2022 meansCoinbase received an upsurge of requests from law enforcement agencies Despite complying to governments’ requests, Coinbase to honor user data In 2022, Coinbase received 66% more requests from global law enforcement agencies as compared to 2021. The crypto exchange received 12,320 requests from law enforcement or government agencies, with 5,304 coming from the United States. […]
Read more »