The Fed keeps the door open to a new rate hike – Commerzbank

Analysts at Commerzbank Research published a note in which they highlighted that the Federal Reserve (Fed) left interest rates unchanged on Wednesday and was uncertain about whether its policy measures will be enough to control inflation in the future.

The Fed keeps its main interest rates unchanged

The Fed today left its official interest rates unchanged, with the target range for federal funds between 5.25% and 5.50%. It is the second consecutive meeting in which the Fed refrains from raising rates. The last rate increase to date was 25 basis points in July… Today’s decision was unanimous.

Fed Chairman Powell again acknowledged in the post-meeting press conference that the economy was surprisingly robust. If there is further evidence of high economic growth, or if the labor market rebounds significantly, further rate hikes could be necessary.

Overall, the Fed sees progress in inflation and believes labor market imbalances continue to gradually decline.

However, he said, it is still not clear whether financial conditions are already restrictive enough to achieve the Fed’s objectives. Asked about this, Powell indicated that, therefore, the Fed continues to lean towards further rate hikes.

Overall, we believe it is more likely that interest rates will not continue to rise. This is because the central bank has been very cautious in recent weeks, despite some surprisingly strong data. We also expect growth to slow significantly in the fourth quarter. We should have indications of this by the next meeting on December 12/13. Among other things, two reports on inflation and two on employment will continue to be published.