Pedestrians walk past the US Federal Reserve in Washington, DC on August 18, 2022. US central bankers remain committed to raising interest rates further to quell rising prices, but agreed it would be appropriate to slow the pace of the hikes ‘at some point,’ the Federal Reserve said August 17.
“Data released since the last meeting indicate that the threat of price re-acceleration due to strong economic activity has diminished somewhat,” Wells Fargo economists wrote in a recent note to clients. “At the June FOMC meeting, we see the Fed revising its outlook in favor of slower growth and firmer inflation,” Bank of America economists wrote in an investor note published Friday.
Nevertheless, a September start to rate cuts would thrust the Fed into the middle of a fractious presidential campaign between President Joe Biden and his Republican opponent, Donald Trump, who has previously questioned the US central bank’s independence.Futures traders see almost no chance of a rate cut before September, according to data from CME Group.
“At this juncture, there is little reason to think that the FOMC will prioritize downside risks to employment over the much more salient risk of sustained high inflation,” economists at Barclays wrote in a recent investor note.