![]() For now, with a strong jobs market the Fed has been free to keep the focus on fighting inflation, notwithstanding issues in the banking sector.Īt its June meeting, the Fed will provide a Summary of Economic Projections, which includes estimates from policymakers on where they see rates at the end of 2023. ![]() If the jobs market weakens then the Fed will have to make a more considered trade-off between taming inflation and boosting job growth. However, recently rising unemployment claims, though volatile and subject to revision, may be a slight concern for the Fed. The data has turned out better than most people expected in a generally hot jobs market into 2023. The other primary component of the Fed’s mandate, in addition to inflation, is full employment. The main wildcard is housing costs, which is a large enough component of the CPI to drive inflation materially lower, as industry estimates suggest is likely over the coming months. Expectations are that headline inflation will continue to slow, but core inflation may remain well above the Fed’s target. Louis Fed President James Bullard in an interview with CNBC said interest rates are not yet high enough to push down on inflation and repeated his preference for "frontloading" rate hikes to lift them to 3.75%-4% by year.On the morning the Fed starts its deliberations, CPI inflation data for the month of May will be released. He added he would be "resolute" in keeping rates high and "resist the temptation" to cut them until inflation was "well on its way" to the Fed's 2% target. If the numbers remain strong “then it may make a case for.another 75 basis point move,” Bostic said. An update on second-quarter gross domestic product showed the economy contracted less than initially thought from April through June. ![]() The Fed gets two more key inflation reports and more jobs data before the September meeting, including the last reading of the personal consumption expenditures price index on Friday, and the August jobs report in a little over a week. In an interview with the Wall Street Journal, Atlanta Fed president Raphael Bostic said “at this point, I’d toss a coin” to decide between a half-point versus a three-quarter-point rate increase. He will have longer-term expectations to manage about how high the Fed thinks rates may need to rise, how long they will need to stay there, and how the Fed might react if the economy weakens more than expected.īut there is also shorter-term focus on what the Fed will do when it meets in just under four weeks. The interviews with George were broadcast ahead of the kickoff Thursday night of the Kansas City Fed's annual research symposium here, held as a live event for the first time since 2019.įed chair Jerome Powell addresses the conference on Friday in remarks expected to summarize where he feels the Fed stands in its fight to control the worst outbreak of inflation in 40 years. The last two increases were in three-quarter point increments, and Fed officials must now decide whether to sustain that pace or reduce it. The Fed has raised rates at each of its meetings beginning in March, with the federal funds rate currently set in a range between 2.25% and 2.5%.
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