As expected, the Federal Open Market Committee (FOMC) decided to keep its key interest rate, the federal funds rate, unchanged at 5.25%–5.50%. Despite the recent resurgence in inflation, the medium-term outlook points to a gradually cooling economy and further decline in core inflation.
At its September meeting, the U.S. Federal Reserve (Fed), as expected, left its federal funds target rate unchanged, at 5.25%–5.50%. The outlook remains hawkish, though, and the interest rate market currently is pricing a 30% probability of an additional 25-basis-point (bp; 100 bps equal 1.00%) hike at the Fed’s November meeting. Despite core inflation’s continued slowing, its current 4.3% year-over-year pace seems too high to us to expect interest rate cuts anytime soon.
Aligning with the U.S. Labor Day holiday, Matthias Scheiber, head of Allspring’s Systematic Edge Multi-Asset team, and Travis Keshemberg, senior portfolio manager on the Systematic Edge Multi-Asset team, review the U.S. employment situation and discuss the potential opportunities and challenges in the next 6 to 12 months.
The Federal Open Market Committee decided to leave the federal funds target rate unchanged, at 5.00% to 5.25%. Inflation fighting remains the top priority, which realistically will likely require some form of economic weakening.
As expected, the Federal Open Market Committee (FOMC) decided to hike its key interest rate, the federal funds rate, by 25 basis points (bps; 100 bps equal 1.00%), to a range of 5.00% to 5.25%. Despite the banking sector’s ongoing wobbles—most recently, First Republic Bank’s takeover by JP Morgan over the past weekend—the FOMC sees fighting inflation as its highest priority.