Powell likely to underscore inflation concerns even as Fed leaves key rate unchanged

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For the first time in nearly two years, the Federal Reserve is set Wednesday to keep its key short-term interest rate unchanged for a second straight policy meeting — the clearest sign to date that the Fed is edging closer to the end of its rate-hiking campaign.

The Fed is standing pat, for now, in part because the economy has been moving mostly in the direction that Chair Jerome Powell has hoped for: InflationBut the deceleration of inflation has slowed, and solid economic growth could keep inflation elevated or even send it higher. As a result, Powell and other Fed officials aren’t yet willing to take a final rate hike off the table.

surging, driven stock prices lower and raised corporate borrowing costs. Several of the Fed’s policymakers have said they think those trends may contribute to an economic slowdown — and, in process, ease inflation pressures — without the need for further rate hikes. Though the Fed has raised its benchmark rate to a 22-year high, it hasn’t imposed any hikes since July. Even so, the yield — or interest rate — on the 10-year Treasury note has kept rising, touching 5% last week, a level it hadn’t reached in 16 years. The surge in Treasury yields has caused the average 30-year fixed mortgage rate to reach nearly 8%.

Source: Loan Digest (loandigest.net)

 

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