Fed signals possibility of 6 to 7 rate hikes through 2024 as taper talks advance
Source: Yahoo! Finance
Yahoo Finance
Fed signals possibility of 6 to 7 rate hikes through 2024 as taper talks advance
Brian Cheung·Reporter
Wed, September 22, 2021, 2:00 PM · 3 min read
The Federal Reserve on Wednesday telegraphed it could hike rates six to seven times by the end of 2024, illustrating the central banks optimism that the COVID-19 recovery will progress well enough for the Fed to tighten its easy money policies in a few years.
The policy-setting Federal Open Market Committee still held interest rates at near-zero in its updated statement, but said it had advanced talks on paring back its asset purchase program.
Since the depths of the pandemic, the Fed has been absorbing about $120 billion a month in U.S. Treasuries and agency mortgage-backed securities. But Fed officials have said in recent weeks that by the end of the year, the economy will likely make the substantial further progress needed for the central bank to begin slowing the pace of those purchases.
If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted, the FOMC statement reads.
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Read more: https://finance.yahoo.com/news/fed-fomc-monetary-policy-decision-september-2021-141145429.html
BumRushDaShow
(128,905 posts)By Rachel Siegel
Today at 2:00 p.m. EDT
The Federal Reserve showed growing optimism for the economic recovery, as the central bank signaled it will likely ease up its support for the markets if the economy progresses as expected, and Fed officials moved up their expectations for a rate hike in 2022. In estimates released Wednesday, at the conclusion of the Feds two-day policy meeting, Fed leaders lowered their expectations for the unemployment rate, projecting it could be 4.8 percent by the end of the year, compared to 4.5 percent from their June projections.
Policymakers continued to expect inflation which has risen faster and higher than the Fed expected this year will simmer back down closer to the central banks 2 percent target next year. The economy has made progress toward these goals, the Fed said in a statement released Wednesday. If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted. Federal Reserve Chair Jerome H. Powell will appear at a news conference at 2:30 p.m. E.T.
Economists and Wall Street have been eager for details on when the Fed will start to dial back its sprawling bond buying program, which helps pump up the markets. The Fed buys up $120 billion a month in asset purchases. Depending on how the Fed paces the taper, those purchases could be reduced to zero next year, and possibly put the Fed in position to raise rates. Fed leaders have consistently said that theyll need to see substantial further progress on both inflation and job growth before easing up on support for the financial system.
Many Fed officials, including Powell, say that bar has been met on inflation. The Feds preferred gauge of inflation showed prices rose 4.2 percent in July compared with the year before, and 0.4 percent compared with June. As the global economy emerges from the pandemics depths, supply chains for used cars, food, construction materials and more have struggled to catch up with pent-up consumer demand, pushing prices up. Fed officials expect prices will stay high until supply chains have time to clear their backlogs. Eventually, they predict inflation will settle back down closer to the Feds 2 percent target. But only time will tell if they are right.
https://www.washingtonpost.com/us-policy/2021/09/22/fed-powell-taper-rate-hike/
Fiendish Thingy
(15,601 posts)BumRushDaShow
(128,905 posts)Last edited Wed Sep 22, 2021, 05:03 PM - Edit history (1)
Yellen said they had some wiggle room the drift into the next FY (i.e., into October). But at the moment, there needs to be some kind of a Continuing Resolution or the government shuts down after after midnight on September 30 (fixed).
Fiendish Thingy
(15,601 posts)BumRushDaShow
(128,905 posts)(have been listening to CDC's ACIP meeting all day and doing other stuff, so the brain and fingers aren't aligned )
Thank you!
SWBTATTReg
(22,114 posts)Post, but got out of it, too much nonsense, too many ADs, etc. But to give Wash. Post credit where it is due, they always seem to be on top of things, article-wise...
Thanks again...
BumRushDaShow
(128,905 posts)Before I retired as a fed, I was continually going on trips down to D.C. metro and would bring back the newspapers from there for my mom including WaPo & USA Today. She was already subbed to the NYT and Philly Inquirer for newsprint deliveries and I kept those going for her until she passed. Since they also came with digital access, I eventually dropped the hard copy paper deliveries but kept the digital access for them.
I decided to also go on and get the digital sub of WaPo and was just checking, and I've had it for 7 years now.
I also sub to Mother Jones and The Atlantic.
SoCalDavidS
(9,998 posts)Nothing makes sense anymore.
JohnSJ
(92,187 posts)still be low
GregariousGroundhog
(7,521 posts)The overnight lending rate will affect interest rates on short term notes, but generally has a lesser effect on longer term bonds.
SWBTATTReg
(22,114 posts)accounts, etc. Interest rates have been at bottom rates for the longest time, my parents complained constantly that it was hard to find decent returns on just about any of their investments...
Marthe48
(16,949 posts)I'm thinking of taking a homeowner's line of equity loan out. I actually started the process last week. I wanted to get a couple of big maintenance things done around my house. I still will, but if increased interest affects the loan, I'll probably cross the fantasy list off :/
peppertree
(21,627 posts)That's what Greenspan did to Gore in '99 and 2000:
Issue one interest rate hike after another - even when inflation was almost non-existent - until the economy cooled just enough to hurt the incumbent party (Democrats).
And this time, they do have some inflation to use as pretext.
Farmer-Rick
(10,163 posts)Just in time.
But it seems to me the Fed has threatened rate hikes before but nothing came of it.