“Fed” seeks to address inflation without harming the economy .. Expectations of fixing interest for the second time

“Fed” seeks to address inflation without harming the economy .. Expectations of fixing interest for the second timeThe Federal Reserve (the US central bank) is likely to announce this week that interest rates will remain at their highest levels in 22 years, as it looks to tackle inflation without harming the resilient US economy.
Analysts and traders analyzing the Fed’s recent speeches overwhelmingly expect the US central bank to keep interest rates steady for the second meeting in a row, as it looks to return inflation to its long-term target of 2 percent.
“The Fed’s comments have confirmed that it will remain unchanged in November,” Bank of America economists wrote in a recent note to clients, according to “French”.
Raising interest rates slows inflation by raising the cost of borrowing from the bank, which weakens economic activity and weakens the labor market.
Since peaking at more than 7 percent in June last year, inflation, as measured by the Fed’s preferred gauge, has fallen by more than half, although it remains firmly stuck above 3 percent.
Futures traders are 99.9 percent more likely that the Fed will vote to keep interest rates steady in November, according to CME Group data.
In a surprising development for many analysts, the Fed’s tight interest rate policy has not pushed the world’s largest economy into recession, and it seems unlikely that it will do so in the coming months.
In fact, resilient consumer spending led to higher-than-expected annual growth of 4.9 percent in the third quarter, building on positive growth in the first half of the year.
At the same time, the employment rate increased and unemployment remained close to historical lows.
“I always say it’s wrong to bet against the American people,”President Joe Biden said in a statement Thursday, shortly after the latest GDP figures were released.
“I never thought that we would need a recession to bring down inflation, and today we saw again that the US economy continues to grow even with low inflation,”he added.
Another factor affecting the Fed is the recent rise in yields on long-term government bonds, as it considers whether to keep the key interest rate on short-term lending fixed.
While the Fed’s main short-term interest rate mainly affects the borrowing rates offered by banks, treasury bond yields determine “everything from mortgage rates to corporate and municipal bond yields,” Diane Swonk, chief economist at KPMG, wrote in a recent note to clients.
“It has already added an explosion in the Arctic, as it led to a mortgage winter, freezing existing owners in their places and preventing first-time buyers from the housing market,”she said.