Fed to deliver 4th consecutive 75 bps rate hike in November | The Financial Express

Fed to deliver 4th consecutive 75 bps rate hike in November

The Fed officials are predicting an additional 1.25 percentage points of tightening before year’s end.

Fed to deliver 4th consecutive 75 bps rate hike in November
Inclusivity has changed complexion this time round. 

Rate hikes by the US Fed are going as per the plot. Having hiked rates by 300 basis points in 2022, the US Fed is all set to hike rates yet again in November. The Federal Open Market Committee (FOMC) meets on November 1-2 to decide on the quantum of the next rate hike. Before that, the September 2022 CPI data are scheduled to be released on October 13, 2022.

The Fed has already reiterated that economic activity needs to slow down much more. In reality, it might not be going as per their expectations. US macroeconomic data show that the economy is not slowing as much as initially anticipated. The US ISM services index for September 22 decreased very slightly from Aug 22 to 56.7 (estimated: 56). According to ADP employment data, 208k jobs were added in September of this year (estimated to be 200k), up from 185k in August.

As inflation is proving to be much stickier than anticipated, the Fed had kept the door open for a fourth successive 75 bps rate hike in November.

For the latest updates on the US stock market, click here.

To bring inflation down, Fed is using monetary tools for the economy to perform below its potential for which supply and demand are to be brought more closely into balance. The Fed can only achieve that by raising rates and maintaining a tight stance on the policy until it does.

The US Federal Reserve announced a 75 basis points (bps) rate hike in its FOMC meeting held on September 21. The dot plot showed Fed officials expected rates to rise to 4.4% in 2022 and 4.6% next year both exceeding market expectations. The Fed officials are predicting an additional 1.25 percentage points of tightening before the year’s end.

Also Read – US Stock Market: Is inflation coming down?

Given the Fed’s tough posture and the possibility that inflation won’t change much over the next month while job growth stays strong, it is highly anticipated the Fed will raise interest rates by 75 basis points for the fourth time in a row in its November 2nd FOMC meeting.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 10-10-2022 at 07:59:00 pm
Photos
7 Photos
WOW! Tourists enjoy frozen waterfall in Baramulla’s Drung – See Stunning Photos
13 Photos
Delhi: Rehearsals for Beating Retreat ceremony in full swing – Photos
12 Photos
Frosty feast to the eyes! Ministry of Railways shares mesmerising pictures of snow clad Hiller Shahabad railway station