Fed not worried to push rates higher due to soft landing in US economy: Economists after July Fed outcome

livemint.com:

US Federal Reserve in its July monetary policy meeting raised its benchmark lending rate to the highest level since 2001, analysts reckon that the US economy and market has been resilient in the face of sticky inflation and hence the central bank is not too worried about pushing rates even higher. The rate-setting Federal Open Market Committee (FOMC) said that July rate hike decision was taken unanimously to tackle the above-target inflation, and signaled the possibility of further increases ahead.

The quarter percentage-point rise lifts the overnight interest rate to a range between 5.25 per cent and 5.5 per cent, the US central bank said, adding that it will “continue to assess additional information and its implications for monetary policy." ‘’The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 per cent objective,'' said FOMC in its statement on July 26.

Economists noted that after ten consecutive rate hikes and a pause in June, the Federal Reserve has now hiked rates again by 25 basis points (bps). As a result, the federal funds rate is now at its highest level in 22 years.

‘’But it looks like the economy is going to be okay. The US economy has been resilient despite high inflation and tightening monetary policy.

The unemployment rate is near record lows in half of US states, and consumer confidence is at a two-year high. Stocks have been doing surprisingly well, with Wall Street defying the pressures of what has been the fastest hiking cycle in about 40 years, noted analysts'' said Subho Moulik, CEO, Appreciate, a fintech