The 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...
The 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.
Interest rate hikes slow down inflation by raising the cost of borrowing from the bank, which dampens economic activity and weakens the labor market. 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."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.
Whereas the Fed's key short-term rate mainly affects the borrowing rates offered by banks, Treasury yields determine "everything from mortgage rates to corporate and municipal bond yields," KPMG Chief Economist Diane Swonk wrote in a recent note to clients. Earlier this month, Fed Chair Jerome Powell said the current policy stance is "restrictive," suggesting monetary policy was working to put "downward pressure on economic activity and inflation."And Philadelphia Fed President Patrick Harker said he believed the Fed was "at the point where we can hold rates where they are.
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