New York
CNN Business
—
Americans are getting ready for food, family and football on Thursday, but investors still hold off until Wednesday afternoon before thanking begins.
That’s because the Federal Reserve released the minutes of its latest meeting at 2 p.m. ET Wednesday, providing more clues about the central bank’s thinking on inflation and rate hikes.
At its November 2 meeting, the Fed increase interest rate to 3/4 percentage point — the fourth consecutive increase of such magnitude. But Fed Chairman Jerome Powell hinted in a press conference that the Fed may soon begin to slow down the pace of rate hikes.
Minutes from that meeting showed that several other Fed policymakers agreed with Powell’s assessment.
“Several participants observed that, when monetary policy approaches a sufficiently restrictive stance to achieve the Committee’s goals, slowing growth within the target range for the fund rate federal is appropriate,” the Fed said in its financial statement. minute.
The Fed added that “a substantial majority of participants judge that a slowdown in growth is likely to be appropriate soon.”
Stocks that were relatively flat and winding before the minutes were released, bounced after they were released. The Dow ended the day up more than 95 points, or 0.3%. The S&P 500 gained 0.6% and the Nasdaq gained 1%.
Other members of the Fed, most notably Vice President Lael Brainard, also alluded to n recent speeches at a slower rate of increase. Yet there was confusing signal another word Fed officialswho have continued to insist that inflation will not go away and must be controlled.
Finally, the Fed said in the minutes that inflation remained “stubbornly high” and “persistent than anticipated.”
With that in mind, traders are now pricing in a more than 75% chance that the Fed will only raise rates by half a point at its December 14 meeting. according to futures contract on CME. This is higher than the 52% probability for a half-point gain a month ago, but lower than the 85% chance of a half-point gain priced in just last week.
A flurry of recent inflation reports seems to suggest that the dizzying pace of price growth is finally starting to slow to a more manageable level. The job market remains relatively healthy, although most recently The number of applications for unemployment benefits increased from a week ago.
But as long as the labor market remains stable and inflationary pressures continue to ease, the Fed is likely to pull back on the extent of rate hikes.
Some experts are increasingly concerned that if the Fed raises rates too much, the rate hikes could eventually slow the economy too much and potentially lead to much higher unemployment rates. and even recession.
The Fed’s rate hike has had a clear impact on the economy. real estate marketWith rising mortgage rates helps put a dent in the home sale.
However, Wall Street is increasingly confident that the Fed can make a so-called soft landing. The Dow up 14% in October, best month since January 1976. The Dow added 4.5% in November and is now down just 6% this year.
The S&P 500 and Nasdaq have also recovered significantly since October, but both of those broader market indexes are still down more heavily on the year than the Dow.
