Fed expected to hold rates at 22-year high

Fed expected to hold rates at 22-year high but leave hikes on the table
https://finance.yahoo.com/news/fed-expected-to-hold-rates-at-22-year-high-but-leave-hikes-on-the-table-094002863.html

---

Summary

The article discusses the Federal Reserve's upcoming policy decision on November 1, 2023. Wall Street expects the Fed to hold rates steady, but retain the option to further raise rates in the future if needed.

The Fed's decision will be based on a variety of economic data, including inflation, employment, and economic growth. The Fed is trying to bring inflation back to its 2% target, but it is also trying to avoid a recession.

The article quotes several economists who have different opinions on what the Fed will do. Some economists believe that the Fed will hold rates steady for the rest of 2023, while others believe that the Fed will raise rates again in December or January.

The article also discusses the challenge that the Fed is facing from rising long-term bond yields. Bond yields have risen sharply in recent weeks, which could put upward pressure on mortgage rates and other borrowing costs.

The article concludes by discussing the "Lemonhead problem" that the Fed is facing. The Lemonhead problem is the idea that the Fed's rate increases are having less of an impact on the economy than they would in a normal rate-hiking cycle. This is because consumers and businesses have already locked in their borrowing at lower rates, and they are now getting 4%-5% on money parked in money-market funds or high-yield savings accounts.

Overall, the article provides a good overview of the challenges that the Fed is facing and the different opinions that economists have on what the Fed will do at its November meeting.

---

Comment

The high levels of interest rates in the Treasury market are having a similar effect even if the U.S. Fed does not raise rates.

Perhaps the question on everyone's mind at this point is not so much whether the Fed will raise rates again, but whether the probability of a recession will increase beyond the stabilization of indicators in a high interest rate environment, and whether inflation will remain on a downward trajectory.

As time goes on, the issues of localized wars at the global level are expected to fade away, and political issues, along with the U.S. presidential election, are expected to enter a stage where political issues will overtake economic issues.