US Fed likely to pause again with rates at 22-year high
Federal Reserve will likely announce it is holding interest rates at a 22-year high on Wednesday, as it looks to tackle inflation without damaging the resilient US economy.
Analysts and traders parsing recent Fed speeches overwhelmingly expect the US central bank to hold rates steady for the second meeting in a row as it looks to return inflation to its long-term target of two percent.
«Fed commentary has all but confirmed that the Fed will stay on hold in November,» Bank of America economists wrote in a recent note to clients.
Interest rate hikes slow down inflation by raising the cost of borrowing from the bank, which dampens economic activity and weakens the labor market.
Since peaking at more than seven percent in June last year, inflation as measured by the Fed's favored yardstick has fallen by more than half — though it remains stuck firmly above three percent.
Futures traders assign a probability of 99.9 percent that the Fed will vote to hold rates steady in November, according to CME Group data.
In a surprising development for many analysts, the Fed's aggressive interest rate policy has not pushed the world's largest economy into a recession, and it looks unlikely to do so in the coming months.
In fact, resilient consumer spending fueled higher-than-expected annualized growth of 4.9 percent in the third quarter, building on positive growth in the first half of the year.
At the same time, hiring has picked up and unemployment remains close to historic lows.
«I always say it is a mistake to bet against the American people,» President Joe Biden said in a statement Thursday, shortly after the latest GDP figures were released.
«I never believed we would need a recession to bring inflation down — and today we
