Fed officials plan to maintain current interest rates. They believe that interest rates may not be effective in curbing rising prices. CNBC discussions revealed that officials require data indicating a slowdown in inflation before considering any rate adjustments.
Skepticism on Rate Cuts
Fed officials are cautious about rate cuts until there’s evidence of an inflation slowdown. Inflation has slowed, but the latest reading shows 2.7%, compared to last year’s progress. Fed is closely monitoring indicators aiming for a 2% target.
Prospect of Rate Hikes
Interest rates may change depending on future trends. Kashkari doubts the current rates’ effectiveness in controlling inflation, citing the soaring housing market prices. Goolsbee mentions the “real fed funds rate,” which considers inflation-adjusted interest rates, highlighting the current rate level as relatively high, suggesting a restrictive monetary policy stance.
Consumer Sentiment and Inflation Expectations
According to the Michigan Consumer Sentiment Survey, consumer concerns about inflation have increased. While short-term inflation expectations have risen due to recent upticks in inflation readings, long-term measurements show a more moderate increase. Federal Reserve officials are adopting a cautious approach and waiting for more data before making any potential rate cuts. Stay tuned for next week’s inflation data updates, which could shape the trajectory of interest rates soon.
Original article: “Fed Officials in Wait-And-See Mode on Rate Cuts Ahead Of Next Week’s Inflation Data” https://www.investopedia.com/fed-officials-in-wait-and-see-mode-on-rate-cuts-ahead-of-next-weeks-inflation-data-8646908
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