Tag Archives: rate hikes

As The Federal Reserve battles inflation CEO of JP Morgan warns the US is months away from a recession

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • JPMorgan CEO Jamie Dimon warns the US is just MONTHS away from a recession as the Fed battles to fight rising inflation – and is more likely to keep raising borrowing costs
  • JPMorgan Chase CEO Jamie Dimon predicted that the US will fall into a recession in the coming months as the Federal Reserve tries to combat rampant inflation
  • Although inflation has fallen to 8.3 percent as of August, it remains stubbornly high, with September’s report likely to influence the Fed’s decision
  • The central bank has been aggressively increasing interest rates to quell inflation, with rates expected to end at 4.4 percent this year
  • More aggressive rate hikes are also expected due to strong job growth and falling unemployment rates, as well as uncertainty in Ukraine

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Federal Reserve ready to raise Interest Rates again

Rev 6:6 NAS “And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Federal Reserve Prepares More Big Rate Hikes Amid Risk That High Inflation Could ‘Become Entrenched’
  • With surging inflation showing no signs of abating, Fed policymakers plan to raise interest rates by either 50 or 75 basis points at the upcoming meeting in July.
  • While tighter monetary policy “could slow the pace of economic growth for a time,” it is “critical” to achieving long-term inflation goals, central bank officials agreed, pledging to take more aggressive action even if it means hurting economic growth.

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Fed leaves rates unchanged, says will be ‘patient’ on future hikes

FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo

By Howard Schneider and Jason Lange

WASHINGTON (Reuters) – The Federal Reserve held interest rates steady on Wednesday but said it would be patient in lifting borrowing costs further this year as it pointed to rising uncertainty about the U.S. economic outlook.

While the Fed said continued U.S. economic and job growth were still “the most likely outcomes,” it removed language from its December policy statement that risks to the outlook were “roughly balanced” and struck language that projected “some further” rate hikes would be appropriate in 2019.

In a separate release from its policy statement, the U.S. central bank also said while it was continuing its monthly balance sheet reduction, it was prepared to alter the pace “in light of economic and financial developments” in the future.

The Fed said in that same document that it had decided to continue managing policy with a system of “ample” reserves, a signal that its balance sheet rundown may end sooner than expected.

Taken together, the two documents were meant to convey maximum flexibility from a central bank buffeted in recent weeks by financial market volatility and signs of a global economic slowdown.

U.S. stock markets extended their gains following the Fed’s statement, and bond yields dropped as investors gauged the language adjustment as signaling a low probability of additional rate hikes any time soon. The dollar weakened against a basket of major trading partners’ currencies.

“In light of global economic and financial developments and muted inflation pressures, the committee will be patient” in determining future rate hikes, the Fed’s rate-setting committee said in its policy statement after a two-day meeting.

The Fed made no change to the $50 billion monthly runoff of Treasury bonds and mortgage-backed securities from its balance sheet. Some traders have urged it to slow or halt its pullback from the bond markets, at least for now.

“Overall this signals the Fed will not be on autopilot going forward,” said Justin Lederer, Treasury analyst at Cantor Fitzgerald in New York.

Fed Chairman Jerome Powell is scheduled to hold a press conference at 2:30 p.m. (1930 GMT).

The Fed raised rates four times last year and signaled in December that it would do so twice this year.

The economic outlook, however, has become more clouded as a result of recent volatility in financial markets and signs that growth is slowing overseas, including in China and the euro zone. There are also fears the 35-day partial shutdown of the U.S. government may crimp consumer spending.

The Fed on Wednesday left its overnight benchmark lending rate in a target range of 2.25 percent to 2.50 percent.

The slight downgrade in the Fed’s language around rate increases included a change in its description of economic growth from “strong” to “solid,” and it noted that market-based measures of inflation compensation have “moved lower in recent months.”

The Fed’s policy decision was unanimous.

(Reporting by Howard Schneider and Jason Lange; Editing by Paul Simao)