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The internal divisions within the Federal Reserve continue to escalate, and a temporary solution has arrived: no interest rate hike in June, and another one in July
Release Time：2023-05-19
The disagreement among Federal Reserve officials over whether to continue raising interest rates or suspend them at next month's FOMC meeting is growing. Some Fed officials have proposed a compromise: 'skip', which means the Fed will not raise interest rates at its June meeting, but will raise them again at its next meeting in July.
On Thursday, Dallas Fed Chairman Lorie Logan stated that she is not prepared to call for a halt to the Fed's interest rate hikes. She proposed a plan to skip interest rate hikes in June.
Logan said:
The data in the coming weeks may still indicate that skipping interest rate hikes in June is appropriate. However, as of today, we have not fully controlled the rise in core inflation rate.
She stated that inflation is still too high, and the reason for suspending interest rate hikes at the Federal Reserve's June meeting is not yet clear. Logan said she was open to the meeting held from June 13th to 14th, but expressed disappointment at the lack of progress on inflation.
Logan pointed out that in each of the past ten meetings of the Federal Reserve, interest rates have been raised, and the United States has made some progress.
As soon as Logan's statement is made, the market expects the possibility of the Federal Reserve raising interest rates to increase at the FOMC meeting held from June 13th to 14th, and the possibility of a rate hike at the July meeting will also increase. According to statistics from Chishang Exchange, the current market expects a nearly 40% probability of the Federal Reserve raising interest rates in June.
A pause can be to skip this interest rate hike, or it can be a longer pause.
There is a lot of uncertainty now, so we must see how things will develop and understand what is the real signal and what is the noise. This will be the information given by the data from week to week.
The Federal Reserve has raised interest rates by 5 percentage points over the past year. Although inflation has declined significantly, the inflation rate is still far higher than the target of 2%.
Recently, senior officials of the Federal Reserve have expressed their opinions on whether to raise interest rates in June. Unlike the almost unanimous statements before previous FOMC meetings, the current internal divisions within the Federal Reserve are becoming increasingly public.
The renowned hawkish official of the Federal Reserve and Cleveland Fed Chairman, Messer, gave the most hawkish voice among senior Fed officials in recent days. She clearly believes that interest rates should continue to be raised:
Based on the data I currently have, considering that inflation has always been so stubborn, for me, I do not believe that the probability of the next federal funds rate level rising and falling is equal.
Richmond Fed Chairman Barkin emphasized that he is open to the Fed's actions in June. But at the same time, he pointed out that he still hopes to receive a clear signal that high inflation has been defeated. If necessary, he will also support further interest rate hikes. "I really want to know more about all these lagging effects. But I also want to reduce inflation. If it is necessary to raise interest rates more, I would be happy to do so."
Regarding the Federal Reserve's signal of suspending interest rate hikes in May, Barkin stated that officials have not yet decided what they will do at next month's FOMC meeting. The information from the last statement is selective and highly uncertain. There are a lot of data to be released before the next meeting.
The New York Fed Chairman William, who holds permanent voting rights on the FOMC and is the third largest figure at the Federal Reserve, stated that reducing inflation levels is crucial. The US economy still faces unacceptably high inflation, but has begun to move in the right direction. The US economy is returning to a normal pattern, beginning to see a rebalancing of demand and supply.
Although Williams did not specify in detail what he hoped the Federal Reserve would do next month, the analysis pointed out that his speech gave the impression that he was willing to adopt a wait-and-see attitude. We know that it will take some time for our decisions to fully impact the economy. We must make a decision, then observe what will happen, receive feedback, and see how the economy is performing
Risk Reminder and Disclaimer
There are risks in the market, and investment needs to be cautious. This article does not constitute personal investment advice, nor does it take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article are in line with their specific situation. Invest accordingly and take responsibility.
More Flash >>
On Thursday, Dallas Fed Chairman Lorie Logan stated that she is not prepared to call for a halt to the Fed's interest rate hikes. She proposed a plan to skip interest rate hikes in June.
Logan said:
The data in the coming weeks may still indicate that skipping interest rate hikes in June is appropriate. However, as of today, we have not fully controlled the rise in core inflation rate.
She stated that inflation is still too high, and the reason for suspending interest rate hikes at the Federal Reserve's June meeting is not yet clear. Logan said she was open to the meeting held from June 13th to 14th, but expressed disappointment at the lack of progress on inflation.
Logan pointed out that in each of the past ten meetings of the Federal Reserve, interest rates have been raised, and the United States has made some progress.
As soon as Logan's statement is made, the market expects the possibility of the Federal Reserve raising interest rates to increase at the FOMC meeting held from June 13th to 14th, and the possibility of a rate hike at the July meeting will also increase. According to statistics from Chishang Exchange, the current market expects a nearly 40% probability of the Federal Reserve raising interest rates in June.
The market expects that Federal Reserve Chairman Powell may provide investors with more information during his speech at the Federal Reserve meeting in Washington this Friday.
A pause can be to skip this interest rate hike, or it can be a longer pause.
There is a lot of uncertainty now, so we must see how things will develop and understand what is the real signal and what is the noise. This will be the information given by the data from week to week.
The Federal Reserve has raised interest rates by 5 percentage points over the past year. Although inflation has declined significantly, the inflation rate is still far higher than the target of 2%.
Recently, senior officials of the Federal Reserve have expressed their opinions on whether to raise interest rates in June. Unlike the almost unanimous statements before previous FOMC meetings, the current internal divisions within the Federal Reserve are becoming increasingly public.
The renowned hawkish official of the Federal Reserve and Cleveland Fed Chairman, Messer, gave the most hawkish voice among senior Fed officials in recent days. She clearly believes that interest rates should continue to be raised:
Based on the data I currently have, considering that inflation has always been so stubborn, for me, I do not believe that the probability of the next federal funds rate level rising and falling is equal.
Richmond Fed Chairman Barkin emphasized that he is open to the Fed's actions in June. But at the same time, he pointed out that he still hopes to receive a clear signal that high inflation has been defeated. If necessary, he will also support further interest rate hikes. "I really want to know more about all these lagging effects. But I also want to reduce inflation. If it is necessary to raise interest rates more, I would be happy to do so."
Regarding the Federal Reserve's signal of suspending interest rate hikes in May, Barkin stated that officials have not yet decided what they will do at next month's FOMC meeting. The information from the last statement is selective and highly uncertain. There are a lot of data to be released before the next meeting.
The New York Fed Chairman William, who holds permanent voting rights on the FOMC and is the third largest figure at the Federal Reserve, stated that reducing inflation levels is crucial. The US economy still faces unacceptably high inflation, but has begun to move in the right direction. The US economy is returning to a normal pattern, beginning to see a rebalancing of demand and supply.
Although Williams did not specify in detail what he hoped the Federal Reserve would do next month, the analysis pointed out that his speech gave the impression that he was willing to adopt a wait-and-see attitude. We know that it will take some time for our decisions to fully impact the economy. We must make a decision, then observe what will happen, receive feedback, and see how the economy is performing
Risk Reminder and Disclaimer
There are risks in the market, and investment needs to be cautious. This article does not constitute personal investment advice, nor does it take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article are in line with their specific situation. Invest accordingly and take responsibility.