ESSENTIAL POINTS:
At this week’s Federal Open Market Committee meeting, the Federal Reserve is expected to Rate Hike Pause interest. The most aggressive monetary policy since the 1980s, according to the stock and bond markets.
Former Fed vice chair Roger Ferguson told CNBC that he believes the Fed’s decision will be much closer than the market anticipates. And that additional central bank rate hikes to control inflation will follow.
Strategists claim that a new bull
At a time when some strategists claim that a new bull market is underway. Traders are signaling that a pause in interest rate hikes is a likely outcome of this week’s Federal Reserve’s Federal Open Market Committee meeting. For the first time since November 2019, the NASDAQ Composite had its sixth consecutive positive week. All major indices closed above their 50-day and 200-day moving averages on Friday. The Dow Jones Industrial Average ended the previous week with three consecutive winning sessions.
The next two US astronauts will be safely transported to the lunar surface by the first commercial human lander being developed by SpaceX’s lender under NASA’s direction.
Savita Subramanian
An equity strategist at Bank of America, recently declared, “The bear market is officially over,” pointing out that the S&P 500 had gained 20% above its October 2022 low.
Given how narrowly a few of the biggest tech firms have been driving the market’s recovery, some have questioned the claim for a new bull market. There is still another significant reason why investors shouldn’t have excessive confidence. The prolonged intervention of the Federal Reserve during the period of monetary policy since the 1980s is by no means desirable. Even if it decides to hold off on releasing its most recent FOMC decision on Wednesday.
Roger Ferguson
A former vice chair of the Federal Reserve, claims as such.
The Fed authorized raising interest rates for the eleventh time in less than a year last month, the fastest tightening of monetary policy since the 1980s. This had a huge impact on the economy, consumers, and stock and bond markets, in addition to the stock and bond markets. The Fed deleted references to the need for “additional policy firming” in its statement following the May FOMC meeting. This has contributed to the market’s general consensus that a pause will announce this week.
Ferguson, however, is not persuaded
He told CNBC’s “Squawk Box” on Friday, “I think the pause here is really a closer call than the market currently expects.” Ferguson adds that even if the Fed does take a break, it doesn’t necessarily mean that the rest of the year won’t see more rate increases.
Ferguson advised the market to prepare for a Fed that will keep raising rates even if this particular was a Rate Hike pause.
He is not the only person who thinks a Fed pause won’t last very long. Last week CNBC did an interview with senior economics correspondent Steve Lisman. “We think the Fed will skip this month,” said Michelle Girard, US head of NatWest Markets here. But July will set the table for action.”
According to Dennis Lockhart
A former president of the Atlanta Fed, a pause is very likely. Inflation will still be a problem for the Fed, he said in an interview with CNBC’s “Closing Bell Overtime”. While it is very gradual, there are some indications of falling inflation. I believe that the Committee still faces significant challenges. Especially with the 2% target.” Lockhart said, referring to the Fed’s announced long-term goal of bringing inflation down to the 2% target range.
The inflation rate in April was 4.9% on an annual basis, which was slightly less than the market assumption. But it is still “sticky,” as seen by the prices across the economy and by the expectations of many CEOs. Who has publicly stated that inflation will continue? May consumer price index report, which is Tuesday. On the opening day of the Fed’s two-day FOMC meeting. Rate Hike Pause will provide this week’s latest annual and monthly inflation trend readings.