Fed poised to hold rates steady despite economy's bullish tone
WASHINGTON - Throughout its two-year battle with inflation, the Federal Reserve has tried to squeeze consumers hard enough through higher interest rates that they stop spending, bring demand in line with supply, and drive U.S. economic growth below its potential to ease price pressures.With financial markets expecting the U.S.
But recent weeks have provided little clarity on when that might happen, with long-awaited turns lower in hiring, housing inflation, services spending and other key data points postponed by an economy that won't quit. Investors consider it a near certainty that the central bank will keep its benchmark overnight interest rate in the 5.25%-5.50% range that was set at its meeting in July, with the odds also weighted against any further increases moving forward.
Gross domestic product growth for the third quarter best exemplified the risks the Fed is trying to parse, with pandemic-era savings, combined with a low unemployment rate and ongoing healthy wage increases, allowing consumers to keep fueling strong economic growth. That countered concerns that developments like renewed student loan payments and weakened consumer confidence would cause people to pull back.
"Consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular," Dana Peterson, the Conference Board's chief economist, said on Tuesday after the business group reported that its consumer expectations index for October remained below a level that has typically signaled a coming recession."Consumers also expressed concerns about the political situation and higher interest rates.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Fed buzz: words to watch for as the Fed sets ratesFed buzz: words to watch for as the Fed sets rates
Read more »
Zombie firms are filing for bankruptcy as the Fed commits to higher ratesBusinesses with rising debt and sinking sales are filing for bankruptcy, a sign of healthy creative destruction to U.S. central bankers.
Read more »
Vanguard CIO Greg Davis: Fed could hike interest rates two more timesVanguard chief investment officer Greg Davis believes the Federal Reserve is not done hiking interest rates.
Read more »
Fed Officials Debate Whether They Have Raised Rates EnoughSpeaking at the Economic Club of New York, Federal Reserve Chair Jerome Powell described the U.S. economy as “resilient” and said he doesn't believe monetary policy is too tight. Photo: Bess Adler/Bloomberg
Read more »
Stock market today: Asian shares track Wall Street gains ahead of Fed decision on interest ratesAsian shares are mostly higher after Wall Street advanced to claim back some of the ground it gave up in another losing month. Tokyo's benchmark jumped 2.4%. Investors are awaiting a decision by the Federal Reserve Wednesday on interest rates. On Tuesday, the S&P 500 rose 0.6%, though it fell 2.2% in the month of October.
Read more »
Fed expected to leave interest rates unchanged despite stubborn inflationA surging economy has complicated the Fed's fight to cool price increases.
Read more »