The federal reserve is expected to pause rate hike in the FOMC meet which will take place on June 13-14.
The Federal Reserve, which is the Central Bank of the United States, is expected to finally end its rate hike campaign in this FOMC (Federal Open Market Committee) meeting on Wednesday. The Federal Reserve which has increased the federal funds rate consecutively for 10 times to a range of 5-5.25% is set to take a pause to assess the economic data.
Most economists and analysts are expecting the federal reserve to pause its rate hike campaign in the June meet which will take place on June 13-14.
Economists and analysts expect rate pause
The federal reserve chair, Jerome Powell has hinted in a press conference in the past that he is inclined towards a rate pause to assess the data and make careful assessments after recent banking failures.
In a press conference at Thomas Laubach three weeks ago, Fed Chair Jerome Powell said that since the liquidity tools have come to a point of tight credit conditions, monetary tools don’t need to be used. He didn’t directly talk about the banking crisis but emphasized on the need to assess the economic outlook after the failure of Silicon Valley Bank and Signature Bank.
According to an economist’s survey, the Federal Open Market Committee is likely to pause rates when it faces a tough decision on interest rates due to persistent inflation. Minneapolis Fed President Neel Kashkari, Dallas Fed President Lorie Logan and Governor Christopher Waller, are those who are seen as opposing Powell to pause and insisting on a rate hike in the upcoming FOMC meet.
Rate pause in persistent inflation
Federal Reserve will have new CPI data on Tuesday which is expected to show a change to 4.1% overall Consumer Price Index and core prices CPI rising to 5.2% on year-over-year basis, slowest since November 2021. While the inflation rates still remain strong, the slowing pace provides the Fed to take a pause to assess economic conditions.
A report scheduled to release on Wednesday is expected to indicate more producer-level deflation, with one key indicator rising at the slowest annual rate in more than two years as goods prices continue to stabilize.
This coming week’s top US economic reports are completed with May retail sales. The value of purchases likely didn’t move much over the month, which is consistent with a decline in consumer demand for goods.
Economists Anna Wong, Stuart Paul, Jonathan Church and Eliza Winger believe that the Fed will pause the rate hike as most influential economists believe the previous rate hikes will have a lagging effect in the upcoming months.
According to Kathy Bostjancic, Chief economist at Nationwide, the leading economists are expected to skip the FOMC meet, but this does not indicate that they will not hike in July.
Around the world, the Bank of Canada and the Reserve Bank of Australia had raised interest rates last week. Along with the Federal Reserve, the European Central Bank and Bank of Japan are also set to hold meetings this week where ECB is likely to go for a rate hike.