The next Federal Open Market Committee (FOMC) interest rate meeting will be held from October 31 to November 1 local time. Will the Federal Reserve raise interest rates this time, or will it further suspend rate hikes? This month, several Federal Reserve officials stated that they can maintain a restrictive monetary policy stance.
As of now, since the Federal Reserve launched this interest rate hike cycle in March 2022, the cumulative rate hike has reached 525 basis points. Among them, the single rate hike gradually increased from 25 basis points to 75 basis points, and there were four consecutive rate hikes at the 75 basis point level, which is the fastest rate hike in nearly 40 years. In February of this year, the Federal Reserve slowed its interest rate hike for the first time to 25 basis points and suspended it in June. Subsequently, it raised interest rates by 25 basis points in July and again suspended it in September.
From October 16th to October 17th local time, Patrick Harker, Chairman of the Philadelphia Federal Reserve and voting member of the 2023 Federal Open Market Committee (FOMC), made multiple statements and stated that the Federal Reserve may have to wait until early next year to decide whether the rapid rate hikes of the past 20 months are sufficient to keep inflation low.
So far, the state of economic and financial development has been as I expected, and may even be better. "Huck explained that although the Federal Reserve's efforts to curb inflation over the past 18 months have had an impact on the current mortgage environment, anti inflation is taking shape, and the Federal Reserve's interest rate policy is gradually being transmitted into the economy. By 2024, the inflation rate will fall below 3% and approach the target level of 2%
Earlier, in a speech at the Delaware Chamber of Commerce on October 13th, Huck stated that the Federal Reserve did not need to raise interest rates again, "I believe we are in a stage where we can maintain interest rates unchanged
The operation of the economy cannot be achieved overnight, and the full impact of interest rate hikes will take some time to manifest. Maintaining stable interest rates will allow monetary policy to play a role, "Huck added. If interest rates continue to remain restrictive, the economy will begin to see a slowdown in inflation and better balance the market.
On October 18th local time, New York Fed Chairman John C. Williams also stated that interest rates will have to remain at restrictive levels for a period of time to bring inflation back to the Fed's 2% target.
We need to maintain this restrictive policy stance for a period of time, "Williams believes, and interest rate cuts in the coming years will depend on data.
In mid October, Chicago Fed Chairman Goolsby analyzed that slowing inflation in the United States was already a trend, rather than a "psychological blip". We must hope and closely monitor to ensure that this situation continues. At the same time, Gullsby opposes the notion that efforts to return inflation to the Federal Reserve's 2% target will stagnate.
On October 20th local time, Cleveland Fed Chairman Loretta Mester stated that the Fed is at or near the peak of its current interest rate target, but she still supports another rate hike within the year. No matter what decision we make at our next meeting, if the economy develops as expected, in my opinion, we are likely to be close to or at the critical point of the federal funds rate
On October 16th local time, US Treasury Secretary Janet Yellen stated that high interest rates may continue while the US economy is in good condition.
Earlier, Federal Reserve Governor Christopher Waller stated that rising interest rates could help slow inflation, and the Fed could observe whether further rate hikes were needed.
The September meeting minutes released by the Federal Reserve indicate that it will "proceed cautiously" to decide whether to further raise interest rates.
According to data from CME Group, the market expects a 97.2% probability of the Federal Reserve maintaining interest rates unchanged at 5.25% -5.5% in November, and a 2.8% probability of a 25 basis point reduction; The probability of maintaining interest rates unchanged from 5.25% to 5.5% in December is 69.1%, the probability of a 25 basis point reduction is 1.9%, and the probability of a 25 basis point increase is 29.0%.