After nearly two years of raising the federal funds rate to restore price stability, the Federal Reserve is poised to all but declare that campaign to be over at its meeting next week. While the Federal Open Market Committee is likely to keep its policy statement largely unchanged, that statement ... READ MORE >
federal funds rate
U.S. economic outlook: Expansion continues into 2024
Solid consumer spending driven by real personal income gains and sustained private investment will underscore a steady pace of growth at or near the 1.8% long-run rate in the United States in 2024. We expect that policy tailwinds from both the fiscal and monetary authorities will set the stage for ... READ MORE >
U.S. October jobs report: Moderation in hiring as wage gains outpace inflation
Hiring in the American economy moderated in October, pointing to a cooler pace of growth and inflation that is a much-needed elixir following the torrid pace of hiring and expansion of recent months. The economy added 150,000 jobs in October with the unemployment rate at 3.9%, the Bureau of Labor ... READ MORE >
R-star: The role of the natural rate of interest in monetary policy and economic growth
The pandemic has spurred profound changes in the global economy like a tight labor market and elevated inflation that policymakers are only beginning to understand. But one result is clear: The days of historically low interest rates are over. Now, policymakers are wrestling with the question of ... READ MORE >
Why the Fed should lift its 2% inflation target
We think that the Federal Reserve’s current cycle of rate hikes has peaked at a range between 5.25% and 5.5%. While inflation stands well above the Fed’s official 2% target, we think that because of the economic and political shocks since the pandemic, the Fed will raise its inflation target in the ... READ MORE >
Rates outlook: As economy enters glide path, bond market hedges its bets
There are growing signs that inflation is retreating while the labor market remains healthy. Absent another shock, the Federal Reserve is likely to ease up on its rate increases as these dynamics take hold. Even a pause in rate hikes would most likely guide the economy toward a mild downturn rather ... READ MORE >
Catch-25: Fed hikes rates amid financial stability risk
Joseph Heller’s novel “Catch-22” delved into the impossible conditions imposed upon people caught in situations from which there is no escape because of mutually conflicting or dependent conditions. That Catch-22 is an apt description of where the Federal Reserve finds itself as it lifted its ... READ MORE >
How high will interest rates go?
As the Federal Reserve struggles to tame inflation, the central bank is raising interest rates and tightening financial conditions in what we think is a regime change that will increase the cost of both public and private debt and curb growth. We expect the Fed to raise its policy rate above 5% in ... READ MORE >
Fed raises its policy rate by 75 basis points as it prepares to slow pace of hikes
The Federal Reserve increased its policy rate by 75 basis points on Wednesday to a range between 3.75% and 4% as it hinted at slowing the pace of its hikes while it assesses the impact of past increases. We expect at least a 50-basis-point hike in December, another 50-point hike in January and then ... READ MORE >
FOMC preview: Policy rate moving higher as Fed may prepare to slow pace of price stability campaign
We expect the Federal Reserve to increase its policy rate by 75 basis points to a range of 3.75%-4% when it publishes its policy decision on Nov. 2. Fed Chair Jerome Powell will almost surely utilize the press conference following the Federal Open Market Committee meeting to note that at one point it ... READ MORE >