The Federal Reserve Banks have for the first time in more than 12 months not suggested that more hikes are coming.
Fed’s chair Jerome Powell, asked if we are to read today’s statement as suggesting a pause, said no decision on a pause was made in the meeting, but there had been a meaningful change in the statement since March.
“You will have noticed that in the statement from March we had a sentence that said ‘the committee anticipates some additional policy firming may be appropriate.’
That sentence is not in the statement anymore, we took that out. Instead ‘in determining the extent to which additional firming may be appropriate’ the committee will take into account certain factors.
That’s a meaningful change that we are no longer saying that we anticipate,” Powell said.
In short, further rate hikes are now very unlikely. They will officially decide in the next meeting whether to pause after raising rates by another 0.25% today to 5.25%, but the end of the rate hikes is coming with a recession.
“The staff’s forecast is… for a mild recession,” Powell said.
He said that he himself is of the view there will be modest growth. The staff has its own forecasts he said, there are different views among participants.
The story is changing. Rate hikes are in the rear mirror now and in front for the economy is a recession. With that for investors comes a big question: has it been priced in for assets?
If it is a mild recession, then it probably has been priced in over last year, but at this point no one knows the extent of it, or if there is one at all.
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- Source: https://www.trustnodes.com/2023/05/03/no-more-hikes-in-guidance-mild-recession-predicted
