Almost all Fed members see future rate hikes amid ‘unacceptably high’ inflation By Investing.com

By Yasin Ebrahim

Investing.com — Almost all Federal Reserve policymakers are backing rate hikes to continue after the June meeting adjournment, citing concerns about the strength of the labor market and “unacceptably high” high inflation, according to in the Fed minutes of June 13. -14 meeting shows on Wednesday.

“Almost all participants noted that in their economic forecasts they judged that a further increase in the target federal funds rate during 2023 would be appropriate,” the minutes of the Fed show.

In the weeks following the June meeting, Fed Chairman Jerome Powell strengthened expectations for the Fed to continue hiking, insisting that monetary policy was not tight enough and saying it would not he rules out the possibility of hiking rates in consecutive meetings.

The Fed stressed the importance of allowing the tightening measure seen so far to filter the economy and prevent inflation, but several Fed members stated that “the possibility that most of the effects of the previous tightening of monetary policy can be” g realized,” the minutes showed, announcing the need for further rate increases.

At the end of the previous meeting on June 14, the Federal Open Market Committee maintained its range in a range of 5% to 5.25%.

But there are some Fed members, according to Fed minutes, who are in favor of a rate hike at the June meeting, amid concerns about a “very tight” labor market and economic strength.

At the meeting, Fed members upgraded their rate-hike forecast, estimating a terminal rate, or peak rate, of 5.6% in mid-2023, from an earlier forecast of 5.1% seen in March, suggesting two more increases ahead.

the Fed’s preferred measure of inflation, is estimated to be 3.9% in 2023, up from an earlier forecast of 3.6%.

With annual inflation still running at a pace of 4.6%, Fed members agreed it was “unacceptably high,” the minutes showed, as the pace of inflation slowed to a slower pace. faster than expected.

Markets appear to be accepting Fed estimates for further hikes in the future, with 86% of traders expecting the US central bank to keep hiking rates on 25-26 July. meeting, according to Investing.com’s.

sensitive to Fed policy changes, also reflected expectations for tighter monetary policy, rising 4.95% and closer to the 52-week high of 5.084%

Before the meeting of the Fed on July 25-26, the upcoming economic data, which includes the report that will be given later in his week and the report that will be given next week, will get more attention of the investor.

The continued tightness in the labor market continues to be a concern for the Fed as it threatens to push wages higher and keep inflation at bay.

Labor market signals were mixed leading into this month’s report, Jefferies said, pointing to the large job losses seen in last month’s household survey data, and a jump in initial claims that out of work in mid-June, but expecting a “solid” monthly paycheck on Friday.

“To put it all together, we want to see the weakness in the initial claims data, and we expect the payroll data to show another strong increase, in line with the trends of recent months,” it added.