With a 75 basis point rate hike expected, analysts will focus on clues about the Federal Open Market Committee’s thought about slowing future increases. “We expect the Federal Reserve to raise the fed funds rate by another 75 basis points at the November meeting, followed by a 50 basis points hike in December,” noted Scott Colbert, director of fixed income and chief economist at Commerce Trust. “… We don’t anticipate a rapid decline in interest rates going forward.” Inflation hasn’t cooled “enough to warrant easing interest rate hikes just yet,” said Steve Skancke, chief economic advisor at Keel Point, “but also not bad enough to support a full 1% rate hike in November.” Additionally, the September minutes showed official are more worried about “taking too little action to bring down inflation compared to the cost of being too aggressive,” he said. While a pivot won’t be suggested, Skancke said, Fed Chair Jerome Powell could suggest “smaller rates hikes lie ahead: 50 bp in December and 25 bp in January, as signs of abating inflation become more evident.”
Source: The Bond Buyer
