"The consequences of not fighting inflation are greater than the consequences of fighting it. "Fighting inflation is job-one," said Eric Winograd, senior economist at AllianceBernstein. Judging by recent market action and commentary, the expectation is for a hawkish hard line. Put it all together, and what investors will be watching most closely will be the meeting's tone – specifically how far the Fed is willing to go to tackle inflation and whether it is concerned about doing too much and taking the economy into a steeper recession. The SEP includes estimates for GDP, unemployment and inflation as gauged by the personal consumption expenditures price index. While the Summary of Economic Projections is not an official forecast, it does provide insight into where policymakers see various metrics and interest rates heading.
#NEXT MEETING OF THE FED UPDATE#
Markets are pricing in a slight chance for a full 1 percentage point increase, something the Fed has never done since it started using the fed funds rate as its primary policy tool in 1990.Įconomic outlook: Part of this week's meeting will see Fed officials issue a quarterly update of their interest rate and economic outlook. That's the highest the fed funds rate has been since early 2008. Rates: In its continuing quest to tackle runaway inflation, the Fed likely will approve a 0.75 percentage point hike that will take its benchmark rate up to a target range of 3%-3.25%. Here's a quick rundown of what to expect from the rate-setting Federal Open Market Committee meeting: It heats up again and then they’re even further behind the curve.While the Fed almost certainly will deliver what the market has ordered, it has plenty of other items on its docket that will catch Wall Street's attention. Kathy Jones, managing director and chief fixed income strategist at the Schwab Center for Financial Research, said the Fed wants more evidence of cooling inflation before it eases off the interest rate hikes because, “if they’re wrong and ease too soon then those inflation expectations start to pick up again. And Gregory Daco, chief economist at EY-Parthenon, said that August inflation report will show prices for more goods falling: “Used cars, perhaps even furniture, are likely to present some signs of easing inflationary pressures.”īut prices in other parts of the economy, for things like rent, are still stubbornly high. We’ll get a look at the latest inflation numbers in a couple of weeks. Gas prices, for instance, have come down. But it does seem like the cost of living is continuing to come down. The continuing shortage of workers could keep feeding inflation, so that would point to more interest rate hikes, which the Fed uses to cool off the economy and put the brakes on inflation. “I think we’ll continue to see that the labor market remains quite tight. “I do think that the jobs numbers will remain pretty strong,” said Ben Ayers,senior economist at Nationwide. First, we’ll get reports on August unemployment later this week on Friday. And some very important data is coming before the Fed’s September meeting, where it’ll decide whether to hike rates again. But, Fed Chair Jerome Powell often says “it depends on the data” when reporters ask him what’s next for things like interest rates. No one has a crystal ball when it comes to the Federal Reserve. If we are in for some economic pain, how long is it going to last? How long will the fight against inflation last? And will the Fed hike interest rates again at its meeting next month? That’s not what markets wanted to hear: The S&P fell more than 3%.īut this leaves some big open economic questions on the table. He said the Fed won’t waiver in its fight against inflation, even if it causes some economic pain in the process. Federal Reserve Chair Jerome Powell was super clear in his speech Friday at the Fed’s big conference in Jackson Hole, Wyoming.
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