ICYMI: The Federal Reserve votes to leave interest rates unchanged.
The Federal Reserve on Wednesday considerably raised its expectations for inflation this year and brought forward the time frame on when it will next raise interest rates.
"You can think of this meeting that we had as the 'talking about talking about' meeting," Powell said in a phrase that recalled a statement he made a year ago that the Fed wasn't "thinking about thinking about raising rates." Though the Fed raised its headline inflation expectation to 3.4%, a full percentage point higher than the March projection, the post-meeting statement continued to say that inflation pressures are "transitory." The raised expectations come amid the biggest rise in consumer prices in about 13 years.
"If you're going to get two rate hikes in 2023, you have to start tapering fairly soon to reach that goal," said Kathy Jones, head of fixed income at Charles Schwab. "It takes maybe 10 months to a year to taper at a moderate pace. Then you're looking at we need to start tapering maybe later this year, and if the economy continues to run a little bit hot, rate hikes sooner rather than later.
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