November 28, 2022

Chart of the Week: Federal Reserve officials hint at slower rate rises

by Fathom Consulting.

Federal Reserve officials have hinted that the speed of interest rate rises may “soon” begin to ease, according to the minutes released last Wednesday from its November meeting. Markets responded positively, with the S&P 500 ending the day up 0.6%. The news came after another 75 basis points hike on top of 3.25, continuing the second steepest hiking cycle in the Fed’s history — a speed which reflects the size of the task facing the Fed.  The officials cited “uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity” as the reasons for potentially beginning to ease the pace of interest rate rises. Despite hiking in smaller increments, some officials warned that the peak for the federal funds rate, expected sometime next year, may be higher than previously expected because inflation had shown “little sign thus far of abating”. The committee next meets on 14 December, with economists anticipating a smaller hike of 50 basis points.

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