Federal Reserve officials are eying another rate hike when they convene next week. But there are signals the next hike could be smaller than those in the past year.<\/p>\n\n\n\n
The Federal Reserve Board of Governors will meet Jan. 31 to Feb. 1. It will be their first meeting of 2023.<\/p>\n\n\n\n
In an effort to control record inflation, the Fed raised its target rate 425 basis points in 2022. Following a series of 75-point hikes, an increase of 50 points was approved in December, putting the target rate at a 15-year high at 4.25 to 4.5 percent.<\/p>\n\n\n\n
With signs of overall inflation cooling, falling from a high of 9 percent in June to 6.5 percent in December, one board members in a speech last week said he would favor a smaller rate hike, while also pushing toward the 2 percent inflation goal.<\/p>\n\n\n\n
\nTo return to the airplane image, after climbing steeply and using monetary policy to significantly raise interest rates throughout the economy, it was apparent to me that it was time to slow, but not halt, the rate of ascent.<\/p>\nChristopher Waller, Federal Reserve Governer<\/cite><\/blockquote>\n\n\n\n
\u201cWhen the FOMC began raising the federal funds rate last spring from near zero, it made sense to move quickly,\u201d said Governor Christopher Waller at the C. Peter McColough Series on International Economics, Council on Foreign Relations in New York. \u201cBut after front-loading monetary policy tightening, with many unprecedented 75 basis point hikes in the federal funds rate target, by early December I believed the policy stance was slightly restrictive, and I supported a decision by the Committee to hike by a still considerable 50 basis points. To return to the airplane image, after climbing steeply and using monetary policy to significantly raise interest rates throughout the economy, it was apparent to me that it was time to slow, but not halt, the rate of ascent.<\/p>\n\n\n\n
\u201cAnd in keeping with this logic and based on the data in hand at this moment, there appears to be little turbulence ahead, so I currently favor a 25-basis point increase at the FOMC\u2019s next meeting at the end of this month. Beyond that, we still have a considerable way to go toward our 2 percent inflation goal, and I expect to support continued tightening of monetary policy.\u201d<\/p>\n\n\n\n
Dallas Fed President Lorie Logan in an address at the University of Texas at Austin\u2019s McCombs called for slowing the pace of hikes.<\/p>\n\n\n\n
\u201cNow, if you\u2019re on a road trip and you encounter foggy weather or a dangerous highway, it\u2019s a good idea to slow down,\u201d Logan said. \u201cLikewise if you\u2019re a policymaker in today\u2019s complex economic and financial environment. That\u2019s why I supported the FOMC\u2019s decision last month to reduce the pace of rate increases. And the same considerations suggest slowing the pace further at the upcoming meeting.<\/p>\n\n\n\n
\u201cA slower pace is just a way to ensure we make the best possible decisions.\u201d<\/p>\n\n\n\n
In December, U.S. Federal Reserve Chair Jerome Powell suggested the committee expects rates to continue to increase in 2023 and elevated rates will be held longer to meet its goal of bringing down inflation in a sustained way.<\/p>\n\n\n\n
\u201cWe will have to hold the restrictive level for longer. The 12-month core inflation is at 6 percent, three times the level we want,\u201d Powell explained. \u201cWe have a long ways to go for price stability.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Federal Reserve officials are eying another rate hike when they convene next week. But there are signals the…\n","protected":false},"author":1,"featured_media":3207,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"csco_singular_sidebar":"","csco_page_header_type":"","csco_appearance_grid":"","csco_page_load_nextpost":"","csco_post_video_location":[],"csco_post_video_location_hash":"","csco_post_video_url":"","csco_post_video_bg_start_time":0,"csco_post_video_bg_end_time":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[28,3,41],"tags":[],"class_list":{"0":"post-3334","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-independent","8":"category-industry","9":"category-subprime","10":"cs-entry","11":"cs-video-wrap"},"_links":{"self":[{"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/posts\/3334","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/comments?post=3334"}],"version-history":[{"count":0,"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/posts\/3334\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/media\/3207"}],"wp:attachment":[{"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/media?parent=3334"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/categories?post=3334"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/niada.com\/dashboard\/wp-json\/wp\/v2\/tags?post=3334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}