Fed Expected To Raise Rates Again, The Bigger Question Is What Follows

MARKET_WATCH Finance

The U.S. Federal Reserve is expected to announce a decision to raise rates 0.25-percentage-points on Wednesday, May 3. But rate decisions for the remainder of 2023 are less clear. 

 

However, the bigger question is what follows at future Fed meetings in 2023. Financial markets fear a looming recession and see the Fed cutting rates in response, however the Fed have signaled that they intent to hold the line with high rates until inflation is clearly beaten.

 

Inflation Down, But Not Out

 

In recent months inflation has dropped well below the peak levels of 2022 on most metrics. Yet still remains well above the Fed’s target. Part of the reason for that is housing costs, which make up a large proportion of the Consumer Price Index, and are continuing to rise using the CPI’s methodology, even if most industry sources show home prices declining. The Fed has signaled it wants to see inflation under control before it contemplates cutting rates. Currently, inflation is running at a 5% annual rate compared to the Fed’s 2% goal. That’s too high in the Fed’s view.

 

Source : [Fed Expected To Raise Rates Again, The Bigger Question Is What Follows](www.forbes.com/sites/simonmoore/2023/05/01/fed-expected-to-raise-rates-again-the-bigger-question-is-what-follows/) by Simon Moore, Senior Contributor - Fed May Hike•Forbes - Investing by Simon Moore, Senior Contributor / May 01, 2023

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