Fed likely to hike interest rates again, then signal a pause

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2 years ago

May 3, 2023

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close video What to expect from the Federal Reserve’s rate hike decision Wednesday

Financial expert Elizabeth Evans gives an economic outlook and discusses futures market pricing before the Federal Reserve’s expected rate hike Wednesday on ‘Making Money with Charles Payne.’

The Federal Reserve is on track to raise interest rates for the 10th straight time Wednesday, but the end may finally be in sight for the fastest tightening campaign since the 1980s.

The U.S. central bank is widely expected to lift the federal funds rate by a quarter-percentage point at the conclusion of its two-day meeting then hint at a long-awaited pause in rate hikes.

The move would set the federal funds rate between 5% to 5.25%, further restricting economic activity as the borrowing costs for homes, cars and other items march higher. It would mark the highest rate since 2007.

FUND MANAGERS WORRY SYSTEMIC CREDIT CRUNCH COULD CRASH US MARKETS

Policymakers projected a peak rate of 5.1% during their March meeting.

But Wall Street is even more focused on Chairman Jerome Powell's press conference at 2:30 p.m. ET for additional clues about what comes next in the Fed's inflation fight. Powell may signal that rate hikes could soon stop, but many economists anticipate he will try to a strike a more ambiguous tone that neither rules out nor sets up another increase down the road.

"While the committee and Powell in his post statement press conference will eschew any idea that a pause is a foregone conclusion, the language put forward in both the statement and the presser will likely set the stage for a one-month period where the hawks and doves will duke it out over the June policy decision," said Joe Brusuelas, RSM chief economist. "We believe that a rate hike at the June meeting remains a distinct possibility."

JAMIE DIMON WARNS BANKING CRISIS HAS RAISED ODDS OF RECESSION

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee meeting in Washington, D.C., March 22, 2023. (Al Drago/Bloomberg via Getty Images / Getty Images)

The meeting comes in the shadow of continued volatility within the financial sector, after the third implosion of a U.S. bank on Monday. First Republic, a San Francisco-based bank that catered to the wealthy, was seized by federal regulators and sold to JPMorgan Chase Monday.

Despite concerns that the banking turmoil could severely tighten credit for U.S. households and small businesses, the Fed is expected to forge ahead with its inflation fight Wednesday.

During a credit crunch, banks significantly raise their lending standards, making it difficult to get a loan. Borrowers may have to agree to more stringent terms like high interest rates as banks try to reduce the financial risk on their end. Fewer loans, in turn, lead to less big-ticket spending by consumers and businesses.

Pedestrians near the U.S. Treasury building in Washington, D.C., Dec. 30, 2022. (Ting Shen/Bloomberg via Getty Images / Getty Images)

While that could help the Fed in its fight to tamp down stubbornly high inflation, it also raises the risk of a recession this year.

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"The major question for the Fed isn’t whether it should pause its tightening cycle but whether it will," said Gregory Daco, EY chief economist. "And legacy may be the defining factor. Fed Chair Powell and most policymakers do not want their legacy to be a failure to bring inflation down to the 2% target."

Inflation showed welcome signs of cooling in March, according to Labor Department data released last month. But core prices pointed to strong underlying price pressures that are still bubbling beneath the surface. The consumer price index remains about three times higher than the pre-pandemic average, underscoring the persistent financial burden high prices have placed on millions of U.S. households.

World

At least 34 dead in Ukrainian city of Sumy after Russian missile strikes

Published

12 mins ago

April 14, 2025

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At least 34 dead in Ukrainian city of Sumy after Russian missile strikes

At least 34 people – including two children – have been killed after a Russian missile attack on a Ukrainian city.

The country’s state emergency service said another 117 people have been injured, with 15 children among them, in the northeastern city of Sumy.

Ukraine’s foreign ministry later added that one of the children injured was a baby girl born this year, saying “even newborns are targets for Russia’s crimes”.

Volodymyr Zelenskyy also shared videos on Telegram of the aftermath of the attack on social media, showing dead bodies in the middle of a city street near a destroyed bus.

As it happened: Russian attack is ‘signal’ to US and Ukraine

Russia ‘dragging out this war’ – Zelenskyy

The Ukrainian president said on social media “only scoundrels can act like this” and that “tough reaction from the world is needed”.

“Russia wants exactly this kind of terror and is dragging out this war,” he added. “Without pressure on the aggressor, peace is impossible.

“Talks have never stopped ballistic missiles and air bombs. We need the kind of attitude towards Russia that a terrorist deserves.”

Andriy Kovalenko, a security official who runs Ukraine’s centre for countering disinformation, noted the strike came after a visit to Moscow by US envoy Steve Witkoff.

US official: ‘This is wrong’

Keith Kellogg, Donald Trump‘s envoy for the Ukraine war, said the attack crosses “any line of decency” and that “there are scores of civilian dead and wounded”.

He added: “As a former military leader, I understand targeting and this is wrong. It is why President Trump is working hard to end this war.”

In response to Mr Kellogg, Mr Zelenskyy’s communications adviser, Dmytro Lytvynm asked: “Don’t you think it’s time to smack the Moscow mule across the nose with a 2X4?”.

Later, US secretary of state Marco Rubio said the strike was “horrifying” and a “tragic reminder of why President Trump and his Administration are putting so much time and effort into trying to end this war and achieve durable peace”.

UK Foreign Secretary David Lammy added he was “horrified” by Russia’s “barbaric strike” on Sumy, and called for an “immediate ceasefire”.

Meanwhile, EU Commission President Ursula von der Leyen said “cruelty struck again” and called the strike a “blatant violation of international law”.

It came hours before a separate Russian strike killed three people in the central district of the southern city of Kherson.

The local governor, Oleksandr Prokudin, said a 68-year-old woman was injured and died in hospital and that a 48-year-old man also died after “the occupiers dropped an explosive device from a drone”.

A 62-year-old woman was also killed “as a result of the shelling”.

On Saturday, a Russian guided bomb hit a house in the northeastern Ukrainian town of Kupiansk on Saturday, injuring four people.

Governor Oleh Syniehubov said on Telegram that three others could be trapped under rubble.

It comes after Russian diplomats accused each other of violating a tentative US-brokered deal to pause strikes on energy infrastructure.

“The Ukrainians have been attacking us from the very beginning, every passing day, maybe with two or three exceptions,” Sergey Lavrov, Russia’s foreign minister, said, adding that Moscow would provide a list of Kyiv’s attacks from the past three weeks.

Andrii Sybiha, his Ukrainian counterpart, dismissed the claim saying on Saturday that Russia launched “almost 70 missiles, over 2,200 [exploding] drones, and over 6,000 guided aerial bombs at Ukraine, mostly at civilians” since agreeing to the limited pause on strikes.

UK

McIlroy wins Masters to complete career Grand Slam – follow latest reaction

Published

12 mins ago

April 14, 2025

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UK

Rory McIlroy claims career Grand Slam with US Masters win

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1 hour ago

April 13, 2025

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Rory McIlroy claims career Grand Slam with US Masters win

Rory McIlroy has completed a career Grand Slam in golf with his win at the US Masters tournament.

The Masters was the last major tournament left for McIlroy to complete the modern golf Grand Slam – a feat only five others have managed before him.

McIlroy, who was making his 11th attempt at completing the Grand Slam, faced off Justin Rose in a sudden-death playoff to decide the Masters champion, after they finished tied on 11 under at the end of regulation on Sunday.

“It’s my 17th time here and I started to wonder if it would ever be my time,” McIlroy said just before slipping on the Green Jacket during the presentation ceremony.

“I’m just absolutely honoured and thrilled and just so proud to be able to call myself a Masters champion.”

McIlroy had missed his six-foot putt for par, a bogey which dropped him back to 11 under, where he joined Rose – leading to a dramatic play-off between the two.

Only five other golfers have been able to complete a career Grand Slam, including Tiger Woods, Jack Nicklaus, Gary Player, Ben Hogan and Gene Sarazen.

McIlroy is a two-time winner of the PGA Championship, claiming the prize in 2012 and 2014.

The 35-year-old also won his first major title, the US Open, in 2011, and won The Open Championship in 2014.

How did McIlroy get to the victory?

McIlroy recovered from losing his overnight two-shot advantage with an opening-hole double bogey to initially take control at Augusta National, only to blow a four-shot lead over his closing six holes.

The world No 2 bogeyed the last to close a one-over 73 and slip back to 11 under alongside Rose, who overturned a seven-stroke deficit and posted a stunning final-round 66 to force a play-off.

The players returned to the 18th for the play-off, where McIlroy made amends for his 72nd-hole blunder by firing a stunning approach to within three feet of the pin and making the birdie putt required for a life-changing win.