Several Federal Reserve officials are scheduled to give speeches in the week ahead. These will provide insight into the policymaker’s upcoming direction, which may affect markets. These speeches will also help traders determine the chances of a December rate hike, which have increased from 50/50 to 80/20.
The biggest event on the calendar is the November Federal Reserve policy-setting meeting, which is set to take place on Thursday and Friday. This will shape the remainder of the holiday-shortened week on Wall Street. Traders will be looking for clues about the December meeting, which is expected to feature a half-point hike in the Federal funds rate.
The Federal Reserve’s latest inflation report was met with mixed reviews. The headline inflation reading grew at a slower pace than expected. Despite this, the overall report was a welcome sign of a softer inflation environment. In the past, the Fed has faced criticism for raising interest rates and seemingly trying to drive Americans out of the labor market.
The Fed has stated that it is still a long way from victory when it comes to taming inflation. They have said that they do not have all the data they need to decide whether the economy is on a good footing. They have also acknowledged that it is premature to make such claims, but they have been careful not to say that they are done with the tightening cycle.
Another event that will shape the week is the Federal Reserve’s minutes from their September meeting. These will provide insight into the Fed’s mindset, as well as its inflation expectations. These are important in the ongoing debate over whether the Fed is taking too little or too much action to curb inflation.
These minutes will also provide a glimpse into the future of monetary policy in the US. In particular, they will reveal whether the Fed is convinced that it would be more costly to increase interest rates too quickly than it would be to raise them too slowly. The Fed’s decision to raise rates to a level that is historically high could spawn more concerns in the financial community.
Several other events are slated for the week, such as Ben Bernanke’s testifying before the Congressional Joint Economic Committee and Federal Reserve Chairman Jerome Powell’s speech at the Brookings Institution. Other speakers will highlight the important data coming out of the US economy.
While the Federal Reserve will continue to raise interest rates, some have noted that the pace of increases will slow down. This may be a signal that the central bank is considering the end of its rate hiking cycle. It may also be a message to investors that the Fed is trying to temper its inflation outlook.
One of the most important pieces of data to look for is the October CPI print. This report is expected to show that underlying price pressures remain elevated, but not as high as they were in October. It is also expected to confirm the Fed’s view that the pace of increases will slow down in December.
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