Wall Street Journal (WSJ) reporter Nick Timiraos, recognized by the market as the megaphone of the Fed, revealed on Tuesday (13) that data on the consumer price index (CPI) is unlikely to change the rate hike Fed interest expected on Wednesday 2, but will complicate discussions at this decision meeting.
The Federal Open Market Committee (FOMC) began its two-day meeting on interest rates on Tuesday 13. At the same time, the United States announced on Tuesday that the consumer price index (CPI) in November increased by 7 .1%, lower than market expectations of 7.3%, fell sharply from the previous value, hitting a new low since December last year. Core CPI increased 6% year over year, also lower than the 6.1% market expectation and previous value of 6.3%.
Investor sentiment strengthened as key inflation data fell, Wall StreetDow Jones IndexIt was once up over 700 points during the session and closed slightly above 100 points.
Traders see a 57.3% probability that the Fed will hike interest rates by a meter next February, up from 35.1% a day earlier, CME’s FedWatch tool showed. Traders also saw the possibility of a pause in rate hikes in March next year, rising to 24.4% from 9.2% on Monday.
Timiraos tweeted on Tuesday that consumer price index (CPI) data is unlikely to change the Federal Reserve’s expectation to hike interest rates 2 yards on Wednesday, but inflation slowed for two straight months, the which could make “an anticipated rate hike next year less likely.” , and how long interest rates will remain in place” is more complicated.
Timiraos also noted that “FOMC members present their quarterly economic forecasts last Friday, and these officials can revise their forecasts anytime through the evening of the first day of the meeting,” suggesting that some officials may have temporarily updated their forecasts. their economic forecasts.
This isn’t the first time Timiraos has revealed that the Fed faces a dilemma.
Timiraos said on Monday that the Federal Reserve has been divided into two camps, the hawks and the doves, and how long to keep rates at that level to keep inflation in check.”
Timiraos pointed out that Powell tends to slow the pace of interest rate hikes and wait for the consequences of a large interest rate hike. The Fed will raise the terminal interest rate to about 5% before March next year, and then keep it at a low level. high level for a longer period of time. It will not be too soon. Switch to an easing policy. If the Fed believes that the economic slowdown is not sufficient to reduce inflation sufficiently, the Fed will continue to maintain the traditional 1 meter pace to raise interest rates.
