![]() ![]() "Major central banks still have work to do on inflation, including the Fed and the ECB. That will likely lead to even more market volatility. What's more, other central banks, mainly the European Central Bank, are likely to step up the pace and size of rate increases as well. Investors have no clue where rates might be by the middle of next year, as forecasts for July 2023 range from a low of 3.25% to a peak of 5%. It will more likely be "the 2001 recession variety, the next-least-bad outcome from an unlikely soft landing."Įven if the economy avoids a major downturn, there are growing worries that the stock market - which has already had a dismal 2022 - could be in for more prolonged pain. But he's not predicting a major economic collapse like 2008. Too many big rate hikes risk "sending the economy into a mild recession," Chubb said. In other words, the Fed's rate hikes could ultimately lead to the economy cooling off more than the central bank would like. "This data will likely encourage the Fed to continue staying in overdrive but also increases the odds that sooner or later they will make a policy mistake by tightening financial conditions too much to fight inflation," said Timothy Chubb, chief investment officer at Girard, in a report. Inflation is undoubtedly a major problem, but the job market is strong, consumers are still spending at a healthy clip and housing prices remain high even though there has been a substantial spike in mortgage rates. The big problem facing the Fed: The economy still seems to be running a little too hot for its taste. RELATED: US inflation will likely need drastic action from the Federal Reserve as food, shelter prices soar The outlook is even murkier for December, with economists predicting rates could be as low as 3.75% or as high as 4.5%. Wall Street is divided on whether the Fed will keep hiking rates aggressively in November, or if inflation pressures will cool enough to allow the central bank to slow the pace for a bit, CNN reported.Īs such, experts' forecasts for the Fed's key short-term rate after the November meeting range from 3.5% to 4%. ![]() The video featured is from a previous report. The Fed will either raise rates by three-quarters of a point for the third consecutive time, to 3%, or it will hike them by an unprecedented one full percentage point to 3.25%.īut what happens after that is anybody's guess. The Federal Reserve's upcoming meeting on Wednesday will be one for the history books. Craig Bolanos, a financial expert with Wealth Management Group, shares what to do before the Federal Reserve raises interest rates.
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