WSJ-Fed Holds Rates Steady but Pencils In One More Hike This YearStronger growth prompts officials to project that rates will stay higher for longer in 2024By Nick TimiraosUpdated Sept. 20,
WSJ- Fed Holds Rates Steady but Pencils In One More Hike This Year
Dated: September 20 2023
WSJ-Fed Holds Rates Steady but Pencils In One More Hike This Year
Stronger growth prompts officials to project that rates will stay higher for longer in 2024
Updated Sept. 20, 2023 3:54 pm ET
With economic activity stronger than anticipated, most officials also expected that they would need to keep interest rates near their current level through next year, according to projections released Wednesday at the conclusion of their two-day policy meeting.
Fed officials raised their benchmark federal-funds rate at their previous meeting in July to a range between 5.25% and 5.5%. They began lifting rates from near zero in March 2022.
Powell last month signaled he was reluctant to declare victory too soon in the Fed’s inflation fight. Recent progress slowing inflation is “only the beginning of what it will take to build confidence that inflation is moving down sustainably,” he said during a widely anticipated address in Jackson Hole, Wyo. And signs of stronger than anticipated economic activity “could put further progress on inflation at risk,” he said.
Their projection for annual core inflation, which excludes volatile food and energy prices, edged down to 3.7% for the fourth quarter, compared with their June projection of 3.9%.
Powell said Fed economists expect that could lower the 12-month core inflation rate to 3.9% in August, down from 4.5% when Fed officials last submitted projections in June. The Fed targets 2% inflation on average.
They fear ending hikes only to discover in coming months that they didn’t go far enough. It could be particularly disruptive if financial markets conclude inflation and interest rates had flattened out only to learn the opposite. Signs that the economy isn’t slowing down has pushed up the yield on the 10-year Treasury note. The 10-year yield has climbed above 4.3%, near the highest level since 2007, and up from 3.9% when Fed officials met in July. That market-determined rate influences an array of borrowing costs, including mortgage rates, which recently hit a 22-year high.
For over 20 years, Jack worked residential real estate in the South Bay and So Cal, recognized as a Top Producing agent. He also served as an investor and a principal member of a small real estate inv....
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