OCTOBER 24, 2022 – FED MEETING NEXT WEEK WITH 0.75 PERCENT INCREASE EXPECTED
The Fed will meet on November 1-2 when a 75-basis point rate increase is a near certainty. The markets are waiting to hear the possible magnitude of the Fed’s increase for December, with hopes for a lesser 50-basis points rise.
Some Fed officials have been suggesting they want to slow down the rate of increases soon and stop lifting rates in 2023. This to avoid causing an unnecessarily sharp slowdown in the economy. But some Fed members have said it is too soon to talk about slowing down because inflation is persistent and broad.
It will be hard to defend a smaller December increase as, up to now, the Fed’s message has been inflation needs to be tamed as quickly as possible. Some Fed officials want to stop for the moment and see how the economy fares with rates remaining steady, arguing raises are easier to increase after the fact than reversing the damage if rates go too high.
A number of economic indicators will be released before the December meeting, including those on employment and inflation. Investors are expecting the Fed to have rates reach 4.6% to 5% in 2023, up from the current range of 3% to 3.25%.