Tue Jun 14 2022 - 11:25
Before data on Friday — which showed prices jumped another 1 per cent in May from the previous month and consumers became increasingly worried that high inflation would remain a problem for longer — the Fed had signalled it was poised to approve a second consecutive half-point rate increase. It would be the first time since 1994 that the US central bank has opted to raise rates by that amount at back-to-back meetings.
Krishna Guha, vice-chair at Evercore, said such a move was “not what we think is optimal policy, and, separately, not in our view good for markets”, which were battered on Monday by rising inflation fears. US central bankers will convey their forecast policy path in an updated “dot plot” to be released on Wednesday, which maps out individual interest rate projections as part of a broader set of estimates about the economic outlook. In its most recent set of projections, published in March, top officials pencilled in a benchmark policy rate of 1.9 per cent by the end of the year, and 2.8 per cent in 2023.
Mr Powell has since acknowledged that the unemployment rate was likely to rise “a few ticks” and that the central bank might only be able to achieve a “softish” landing for the economy — a message Gargi Chaudhuri, head of iShares investment strategy for the Americas at BlackRock, chalked up to: “We can’t go all guns blazing now without some spillover.”
A recent poll of leading academic economists by the Financial Times showed that nearly 70 per cent believed the US economy will tip into a recession next year.
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Source: IrishTimes - 🏆 3. / 98 Read more »