Americans are getting ready to eat, family, and play football on Thursday. Investors waited until Wednesday afternoon to start giving thanks, while Americans were getting ready to eat, drink, and celebrate.
The Federal Reserve published the minutes of its most recent meeting on Wednesday at 2 PM ET. This provided additional clues about the central bank’s thoughts regarding inflation and rate hikes.
The Fed increased rates by three-quarters a percentage point at its November 2 meeting, its fourth consecutive hike of such magnitude. Jerome Powell, Fed chair, suggested that the Fed might soon slow down the pace of rate hikes press conference.
The minutes of that meeting revealed that Powell’s assessment was supported by several Fed policymakers.
Participants observed that as monetary policy approaches a stance that is sufficiently restrictive to meet the Committee’s goals it would be appropriate to slow down the pace of increasing the target range of the federal fund’s rates, the Fed stated in the minutes.
The Fed stated that “a substantial majority” of participants believed that a slower pace of growth would be appropriate soon.
Stocks rose after the minutes were released, having been flat and meandering prior to their release. The Dow finished the day higher than 95 points or 0.3%. The S&P 500 rose 0.6%, while the Nasdaq climbed 1%.
In recent speeches, other Fed members, including vice chair Lael Mindard, suggested a slower pace for hikes. However, there have been some confusing signals from Fed officials who continue to emphasize that inflation is not going away and must be controlled.
The Fed stated that inflation is still “stubbornly high” as well as “more persistent than expected.”
Investors hoping for smaller rate hikes
According to CME futures contracts, traders now expect a 75% chance that Fed will raise rates only by a half point at its December 14 meeting. This is a rise in odds from 52% for a half-point hike a month earlier, but less than the 85% likelihood that a half-point increase will be priced in this week.
Recent inflation reports suggest that the rate of price rises is slowing to manageable levels. Although the job market is still relatively healthy, recent figures on jobless claims have increased from a week earlier.
On Friday, November 26, 2021, Black Friday shoppers walked through the Westfield Oakridge Mall in San Jose, Calif.
Before Black Friday and the Holidays, all eyes are on you, the consumer.
The Fed will likely reduce the rate increases, as long as there is a strong labor market and low inflation.
Experts are becoming more concerned that the Fed could increase rates too aggressively, which could lead to a slowdown in the economy, higher unemployment, job loss, or even a recession.
Rate hikes by the Fed have had an obvious impact on the housing market.
Wall Street remains confident that the Fed will be able to achieve a soft landing. The Dow rose 14% in October to its highest point since January 1976. The Dow is up 4.5% in November and is down only 6% for the year.
Although the S&P 500 has seen a significant rebound since October, the Nasdaq and Nasdaq have both been down sharper than the Dow.
More information from the Fed about rate hikes
