Some economists think that Fed Chairman Jerome Powell will want to push back against expectations the central bank is almost done with rate hikes.
Financial markets seem almost giddy these day on expectations that inflation is going to turn out to be transitory after all and that the Federal Reserve will be able to pause rate hikes in the spring and lower interest rates before Thanksgiving.
Some economists think that Fed Chairman Jerome Powell will want to push back on the idea that the central bank is about to pivot. Changes to the policy statement are likely to pack more punch than what Powell has to say at his news conference, said Krishna Guha, vice chairman of Evercore ISI. While continuing to use the plural “increases” might be the easiest, and hawkish, thing to do, Michael Feroli, chief U.S. economist at JP Morgan Chase, thinks a good case can be made to qualify that phrase.
“So he may well decide to play it safe and leave the statement formula alone while fine-tuning the message in the press conference, or compromise on ‘additional increases’ — more than one but not necessarily ‘ongoing,’” he said. Emphasizing no rate cuts expected this year The minutes of the Fed’s December meeting also underscored that none of the central bank’s top 19 officials “anticipated that it would be appropriate to begin reducing the federal funds target in 2023.”
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