In a speech and question-and-answer session at the Economic Club of New York, Fed Chairman Jerome Powell tried to keep his options open by maintaining a neutral stance. Rabobank economists analyze the outlook for the Fed’s monetary policy.
Chief Powell continues to proceed with caution
Earlier in the year, Powell said he saw a tightening of credit conditions possible after March’s mini-banking crisis as a substitute for rate hikes. However, he remains hesitant to apply the same logic to rising Treasury yields. Strong job and GDP growth is likely to keep the door open to further increases. However, with less than two weeks until the next meeting, today’s neutral behavior does not suggest that we will see a rate hike on November 1. But that option remains open for the December meeting.
However, we continue to expect the bond market to do the Fed’s job, making further increases in official interest rates superfluous. However, we continue to see upside risks to our baseline forecasts. If economic data remains strong, sooner or later the FOMC will have to resume its hiking cycle.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
