So even as the central bank looks to take a break from its interest rate hikes, it plans to tell businesses and consumers there are more increases to come."The case to keep hiking remains strong," Neil Dutta, head of economic research at Renaissance Macroeconomics, a data and consultancy group, wrote in a note to clients Monday.
He noted that unemployment, at 3.7%, remains much lower than what the Fed has anticipated. Meanwhile, economic growth actually appears to be picking up, he said, citing a recent forecast from the International Monetary Fund.At least one Fed official agrees there is no need to stop the interest rate bumps now.
“I don’t really see a compelling reason to pause — meaning wait until you get more evidence to decide what to do,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said last month in an interview with the Financial Times. “I would see more of a compelling case for bringing up.”Others disagree that the Fed needs to stay on its current pace of hiking, citing the fact that it often takes time for tighter monetary policy to take full effect in the economy.
In addition to an apparent slowdown in price increases, the labor market is also showing signs of weakness, he said, citing higher jobless claims, reduced hours worked and lower demand for temporary payrolls.“Maybe the majority of the tightening impact of what the Fed already did is still to come,” Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said last month.
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