The Fed offers more clues about rate hikes | CNN Business-EnglishHindiBlogs-News

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Americans are gearing up for food, family and football on Thursday, but investors held off until Wednesday afternoon before Thanksgiving begins.

That’s because the Federal Reserve released the minutes of its latest meeting at 2 p.m. ET Wednesday, which provided more clues about the central bank’s thinking on inflation and interest rate hikes.

The Fed raised rates by three-quarters of a percentage point at its November 2 meeting – its fourth straight increase by such a large amount. But Fed Chairman Jerome Powell suggested at a news conference that the Fed could soon start slowing the pace of hikes.

Minutes of that meeting showed that many other Fed policymakers agreed with Powell’s assessment.

The Fed said, “Many participants observed that, given that monetary policy turned to an stance that was restrictive enough to achieve the Committee’s goals, it was appropriate to slow the pace of increases to the target range for the federal funds rate.” Will happen.” minutes.

The Fed said that “a large majority of participants decided that a reduction in the pace of growth too soon would be appropriate.”

Stocks, which were relatively flat and drifting before the minutes came out, popped after they were released. The Dow climbed more than 95 points, or 0.3%, at the end of the day. The S&P 500 jumped 0.6% and the Nasdaq climbed 1%.

Other Fed members, notably Vice Chair Lael Brainard, also hinted at a slower pace of growth in recent speeches. Yet there have been confusing signals from other Fed officials, who have been insisting that inflation is not coming down and must be brought under control.

To that end, the Fed said in the minutes that inflation remained “stubbornly high” and “more persistent than expected.”

With that in mind, traders are now pricing in an over 75% chance that the Fed will raise rates by only a half point at its December 14 meeting. As per futures contract on CME, That’s up from the 52% odds for a half-point increase a month ago, but the odds of a half-point increase are less than the 85% that price had in the past week.

A recent batch of inflation reports suggested that the rampant price rise is finally slowing down to more manageable levels. The job market also remains relatively healthy, although the most recent jobless claims data rose from a week earlier.

But as long as the labor market remains stable and inflationary pressures subside, the Fed will hold back on the magnitude of its rate hikes.

Some experts are concerned that if the Fed goes too far with rates, the hike could eventually slow the economy too much and potentially lead to much higher unemployment, job losses and even a recession. .

The Fed’s rate hike has had a clear effect on the housing market, with increases in mortgage rates helping to put a dent in home sales.

Still, Wall Street is becoming more convinced that the Fed may be able to pull off a so-called soft landing. The Dow rose 14% in October, its best month since January 1976. The Dow is up 4.5% in November and is now down only 6% this year.

S&P 500 And nasdaq They’ve also rebounded significantly since October, but both of those broad market indexes declined more sharply for the year than the Dow.