NOVEMBER 28, 2022 – FED HOPES TO SLOW THE PACE OF RATE INCREASES
A “substantial majority” of policymakers at the Federal Reserve’s November meeting said it would “likely soon be appropriate” to slow the pace of interest rate hikes. According to the minutes of the meeting when the Fed raised rates by 0.75 percent for the fourth time this year, officials seem to be, by and large, feeling they can start moving rates up in smaller, more deliberate steps. Their concerns about “overshooting” the optimal level of interest rates is increased.
They mentioned “the pace of future increases” would “take into account the cumulative tightening of monetary policy, the lags which monetary policy affects economic activity, inflation and economic and financial developments.” Inflation continues to run at more than three times the central bank’s target of 2 percent, but recent data seems to indicate inflation has now peaked.
The take-away is rates are not coming down, but rather increasing at a slower rate. If you want to create greater certainty for future financial obligations, now would be a good time to hedge your loans and lock into a lower rate now.