At least according to investor bets across the market, as illustrated byOn Wednesday, policymakers made a 25-basis-point interest rate hike to bring the federal funds rate to the 5.25%-5.5% range. Chair Jerome Powell maintained that the Fed will make future policy decisions on a"meeting-by-meeting" basis as new economic data comes in.
Per CME, however, traders are giving the highest odds to a scenario where the benchmark rate stays in the current range after Fed meetings in September , November , and December . Edward Moya, a strategist at Oanda, believes the central bank is likely done with rate hikes, and that buoys soft-landing hopes.
"The Fed is keeping optionality for future rate increases but it probably won't need them," Moya wrote in a note after the policy announcement."The disinflation process will remain as the economy is weakening and the corporate world should start feeling the impact of tighter credit conditions."at a 3% annual rate, down from 9.1% a year earlier.
Meanwhile, the Fed's staff economists no longer see a recession, and the initial reading on second-quarter GDP showed a surprise acceleration to 2.4% growth."The September 20th FOMC meeting could go either way in terms of another hike or another pause," DataTrek's Nicholas Colas wrote in a note Thursday."Powell pointed out that the FOMC will have the benefit of seeing two rounds of monthly economic data before its next rate decision.
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