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Encik Powell know life is difficult as inflation pressure very high, he will help u more, kym?
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Rate-cut expectations give way to questions about a Fed hike — and how much higher interest rates should go
Last Updated: April 19, 2024 at 4:00 p.m. ETFirst Published: April 19, 2024 at 1:08 p.m. ETBy
Vivien Lou Chen
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Financial-market participants are starting to ask whether Federal Reserve Chair Jerome Powell and the policy-setting Federal Open Market Committee need to lift rates again.
JUSTIN SULLIVAN/GETTY IMAGES
On a day devoid of any major calendar-scheduled market-moving events, portfolio managers, economists, and Federal Reserve policy makers are all asking the same question: Are U.S. interest rates, now at a 23-year-high of 5.25% to 5.5%, high enough?
Expectations for 2024 rate cuts by the Fed are now being accompanied by conversations about an alternative scenario, one where higher borrowing costs are what’s needed to vanquish inflation.
On Thursday and Friday, two officials, New York Fed President John Williams and Chicago Fed President Austan Goolsbee, failed to rule out the possibility of a rate hike.
And on Tuesday, Federal Reserve Chair Jerome Powell cited a lack of confidence that inflation is coming down to the central bank’s 2% target and signaled that rates will need to remain at current levels for longer.
Inflation readings have come in consistently higher than expected for the first three months of the year, and U.S. economic growth is now expected to perform better than previously thought in 2024.
On average, economists polled by the Wall Street Journal estimate that the economy grew at a 2.2% real annualized rate during the first quarter and should grow by 1.4% in the third quarter, before picking up slightly to 1.5% in the final three months of the year.
Expectations for 2024 rate cuts by the Fed are now being accompanied by conversations about an alternative scenario, one where higher borrowing costs are what’s needed to vanquish inflation.
On Thursday and Friday, two officials, New York Fed President John Williams and Chicago Fed President Austan Goolsbee, failed to rule out the possibility of a rate hike.
And on Tuesday, Federal Reserve Chair Jerome Powell cited a lack of confidence that inflation is coming down to the central bank’s 2% target and signaled that rates will need to remain at current levels for longer.
Inflation readings have come in consistently higher than expected for the first three months of the year, and U.S. economic growth is now expected to perform better than previously thought in 2024.
On average, economists polled by the Wall Street Journal estimate that the economy grew at a 2.2% real annualized rate during the first quarter and should grow by 1.4% in the third quarter, before picking up slightly to 1.5% in the final three months of the year.
Fed officials “didn’t raise rates high enough to break inflation” after lifting borrowing costs by more than five percentage points from 2022 to 2023, said John Luke Tyner, a portfolio manager at Alabama-based Aptus Capital Advisors, which manages $5.6 billion.
“What we are potentially seeing is the effects of them scrambling, considering inflation has bottomed and is rising marginally.”
The risks for the Fed are high, considering policy makers have been preparing investors for three quarter-point rate cuts since last December.
The last time that the central bank raised interest rates was on July 26, 2023, and officials have kept borrowing costs unchanged for almost a year to allow the full impact of their rate-hiking campaign to take hold.
“For the Fed to reverse and start talking about a potential hike would produce shock waves across markets,” Tyner said via phone on Friday.
“What we are potentially seeing is the effects of them scrambling, considering inflation has bottomed and is rising marginally.”
The risks for the Fed are high, considering policy makers have been preparing investors for three quarter-point rate cuts since last December.
The last time that the central bank raised interest rates was on July 26, 2023, and officials have kept borrowing costs unchanged for almost a year to allow the full impact of their rate-hiking campaign to take hold.
“For the Fed to reverse and start talking about a potential hike would produce shock waves across markets,” Tyner said via phone on Friday.
Fed’s Preferred Inflation Gauge Is Set to Back Rate-Cut Patience
- After CPI data rocked global markets, focus shifts to core PCE
- BOJ may hint at future rate hikes; German Ifo index due
Jerome Powell during a fireside chat at the Wilson Center in Washington, DC, on April 16.
Photographer: Samuel Corum/Bloomberg
By Molly Smith and Craig Stirling
April 21, 2024 at 4:00 AM GMT+8
Updated on
April 21, 2024 at 8:42 PM GMT+8
Federal Reserve officials are about to get further confirmation that progress against inflation has stalled, supporting what appears to be a shift in tone to keep interest rates higher for longer than previously anticipated.
Policymakers’ preferred inflation gauge — the personal consumption expenditures price index — probably stayed elevated in March, according to data due in the coming week.
Have a confidential tip for our reporters?
Fed's Bostic: open to a rate hike if inflation progress stalls
By ReutersApril 19, 20246:58 AM GMT+8Updated 3 days ago
Atas BLM will help us out of inflation misery
https://www.reuters.com/markets/us/...hike-if-inflation-progress-stalls-2024-04-18/
President and Chief Executive Officer of the Federal Reserve Bank of Atlanta Raphael W. Bostic speaks at a European Financial Forum event in Dublin, Ireland February 13, 2019. REUTERS/Clodagh... Purchase Licensing Rights, opens new tab Read more
April 18 (Reuters) - Atlanta Federal Reserve Bank President Raphael Bostic on Thursday said that if inflation does not continue to move toward the U.S. central bank's 2% goal, as he expects it will, central bankers would need to consider an interest-rate hike.
"If inflation stalls out or even starts moving in the opposite direction, away from our target, I don't think we'll have any other option but to respond to that," Bostic said at the University of Miami.
What Fed’s Rate-Cut Delay Means for US and the World
Runners pass the Marriner S. Eccles Federal Reserve building in Washington, DC.
Photographer: Andrew Harrer/Bloomberg
By Molly Smith and Malcolm Scott
April 20, 2024 at 3:38 AM GMT+8
The US Federal Reserve and its vast global audience thought 2024 would be a rate-cut bonanza. But with price inflation proving much stickier than almost anyone predicted, those expectations are fading fast.
Fed Chair Jerome Powell confirmed as much on April 16, when he signaled that policymakers would wait longer than previously anticipated to cut rates following a series of surprisingly high inflation readings.
Traders now see just one or two rate cuts happening this year. That’s a big letdown from the roughly six they expected to start the year and the three that Fed officials penciled in as recently as March
Some investors and economists say there’s a chance of no cuts at all this year.
https://www.bloomberg.com/tips/
https://www.reuters.com/markets/rat...-grates-global-peers-imf-meetings-2024-04-19/
April 19, 20241:10 PM GMT+8Updated 3 days ago
Storm clouds gather over the U.S. Federal Reserve Building before an evening thunderstorm in Washington June 9, 2006. REUTERS/Jim Bourg/File Photo Purchase Licensing Rights, opens new tab
WASHINGTON, April 19 (Reuters) - Finance chiefs from economies large and small are scrambling to keep pace with the Federal Reserve's rapid resetting of rate-cut expectations as U.S. inflation data roils markets from London to Brazil.
All insist they are setting policy independently of the Fed and basing it on local conditions. But those conditions are now being buffeted by a sudden likelihood of U.S. interest rates staying higher for longer than had been expected as the year began after a run of hotter-than-expected inflation data.
Fed's rate-cut foot-dragging grates on global peers at IMF meetings
By Marcela Ayres, Leika Kihara and Karin StroheckerApril 19, 20241:10 PM GMT+8Updated 3 days ago
Storm clouds gather over the U.S. Federal Reserve Building before an evening thunderstorm in Washington June 9, 2006. REUTERS/Jim Bourg/File Photo Purchase Licensing Rights, opens new tab
WASHINGTON, April 19 (Reuters) - Finance chiefs from economies large and small are scrambling to keep pace with the Federal Reserve's rapid resetting of rate-cut expectations as U.S. inflation data roils markets from London to Brazil.
All insist they are setting policy independently of the Fed and basing it on local conditions. But those conditions are now being buffeted by a sudden likelihood of U.S. interest rates staying higher for longer than had been expected as the year began after a run of hotter-than-expected inflation data.
It's an unexpected turn that has supercharged the U.S. dollar, stressing other currencies in return and raising the prospect of currency intervention in Asia.
It has also forced Latin American central bankers to tailor their rate-cut plans, and even left officials in developed countries wondering whether new constraints on their own easing plans may emerge.
"When the March (U.S. inflation data) scare came, there was a drastic reversal of expectations, and this changed the mood significantly regarding how economic variables will behave worldwide,"
Brazil's Finance Minister Fernando Haddad said in a press conference in Washington on Thursday on the sidelines of the International Monetary Fund and World Bank spring meetings.
"Everything else depends somewhat on this."
It has also forced Latin American central bankers to tailor their rate-cut plans, and even left officials in developed countries wondering whether new constraints on their own easing plans may emerge.
"When the March (U.S. inflation data) scare came, there was a drastic reversal of expectations, and this changed the mood significantly regarding how economic variables will behave worldwide,"
Brazil's Finance Minister Fernando Haddad said in a press conference in Washington on Thursday on the sidelines of the International Monetary Fund and World Bank spring meetings.
"Everything else depends somewhat on this."
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