NOVEMBER 6, 2023 – FED HOLDS RATES STEADY AS ECONOMY SLOWS
As predicted, the Fed did not change interest rates at their meeting last week, keeping rates in the range of 5.25 to 5.5 percent. The Fed slightly changed their view, stating “economic activity expanded at a strong pace in the third quarter”, while previously they said the economy was growing at a “solid pace”.
Despite the recent rise in yields putting a damper on inflation, Fed Chair Powell said at the news conference following the meeting that they are not ruling out a rate hike in December, though the markets put the probability of that at 10 percent. The Treasury detailed their plans on bond sales, saying they will be auctioning $112 billion in debt.
Other data released last week showed signs of a cooling economy and labor market. The manufacturing index contracted more than expected in October, while new jobs rose by 150,000 in October, far below the 297,000 in September. The unemployment rate rose to 3.9 percent, up 0.1 percent from last month.
Steady hiring, along with healthy economic growth and decelerating inflation has raised hopes the Fed can pull off a soft-landing despite the huge run up in rates we have experienced in the last 22 months.