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

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.

Economists at Wall Street banks have estimated that sharp losses in the stock market and higher bond yields over the past few months will have a depressive effect on the economy equal to the impact of three or four quarter-point rate hikes by the Fed. Market analysts say an array of factors have combined to force up Treasury yields. For one thing, the government is expected to sell potentially trillions of dollars more in bonds in the coming years to finance huge and persistent budget deficits even as the Fed is shrinking its holdings of bonds. As a result, higher Treasury rates may be needed to attract more buyers.

Source: Loan Digest (loandigest.net)

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