Next Fed Meeting on Interest Rates – When the Federal Open Market Committee (FOMC) meets on May 4-5, it will be fixed between a rock and a hard place. As it strives to wipe out the highest rates of U.S. Rise in more than 40 years. Some experts anticipate the FOMC will hike the federal funds rate by 50 basis points in May. More than doubling the March increase.
The problem is that the Federal Reserve’s attempt to dampen off increasing prices began about a year after they first began to rise. As a result, the Fed may be required to raise interest rates throughout the year. Next Fed Meeting on Interest Rates and maybe into 2023—to make up for a lost time.
Back to the rock and hard place. A higher fed funds rate means greater borrowing costs across the US economy. Even as rising increase continues to erode consumer purchasing power. The fear is that these two factors will cause the economy to slow to the point of entering a decline.
The Federal Reserve is Running Late & Next Fed Meeting on Interest Rates
The Fed expected that inflation was only temporary until late 2021. Fed experts estimated in October 2021 that inflation would only reach 2.4 percent 2021. Before falling to 2 percent by late 2023. Using their preferred metric, core personal consumption expenses (PCE).
In March 2021, Fed chair Jerome Powell stated, “These one-time price hikes are likely to have only temporary effects on inflation”.
The core PCE figure for February was 5.4 percent, more than double the Fed’s calculation for late 2021 and well above its 2 percent objective. The consumer price index (CPI) is at its highest level since 1981, at 6.5 percent.
The markets have been slow to adjust to the shift in monetary policy strategy. According to the CME Group’s Fed Watch Tool, market participants projected a 4 percent likelihood that the Fed will raise the federal funds rate to a range between 2.5 percent and 3 percent in 2022 a month ago. They now believe there’s a nearly 80 percent likelihood we’ll end the year there.
“Next Fed Meeting on Interest Rate”, said Diana Furchtgott-Roth, an economics adjunct professor at George Washington University. “They’ll have to significantly boost the federal funds rate, which will hinder the economy. “It’s also election season”.
The Fed Benefits from the Strong Labor Market
Because the economy is doing so well on many broad metrics. The Fed believes it can make this quick flip to fighting rise. The unemployment rate is currently at 3.6 percent, roughly where it was prior to the start of the Covid-19 Recession. Initial jobless claims are at their lowest level since 1968. Despite the fact that there are still over 11 million job opportunities as of February.
In the meantime, the work market is improving. Since the economy reopened, the labor force participation rate among those aged 25 to 54, known as prime workers, has been slowly growing, albeit it still lags below where it was pre-Covid. In fact, there are over one million fewer individuals employed now than there were two years ago.
The Fed can take heart from the workers who are still unemployed. According to the Federal Reserve Bank of Atlanta, wages are expanding faster than at any other time in the twenty-first century. Which is running not only broader inflation but also raising inflation expectations.
What Does the FOMC Stand for?
The Federal Reserve’s monetary policy committee is known as the FOMC. It sets interest rates and directs open market operations to determine the direction of monetary policy. The 12-member committee meets eight times a year to study the US economy and vote on whether to change the fed funds target rate or the way open market operations are conducted. For more news www.themacforums.com
What Constitutes an FOMC Member?
The Fed Chair, Jerome Powell; the other six members of the Federal Reserve Board of Governors (led by the Fed Chair). The president of the Federal Reserve Bank of New York; and four of the remaining 11 regional Federal Reserve Bank presidents. Those who serve one-year terms on a rotating basis, make up the FOMC’s 12 members.
What is the Date of the Next FOMC Meeting?
The FOMC has meetings eight times a year, once every six weeks. If economic conditions spiral out of control and the Fed deems it needs to act before the next planned meeting. The committee can convene on an emergency basis. The following are the dates for the next Fed meetings:
- Dec 14-15, 2021
- Jan 25-26, 2022
- March 15-16, 2022
- May 3-4, 2022
- June 14-15, 2022
- July 26-27, 2022
- Sept 20-21, 2022
- Nov 1-2, 2022
- Dec 13-14, 2022
