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Fed will hold rates steady to fight persistent inflation, economist says

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All eyes are on the FOMC meeting as it begins on Tuesday, with markets wondering the potential implications for the future of interest rates. Joining Catalysts to share his insights and expectations regarding the Fed’s decision is Deutsche Bank Senior U.S. Economist Brett Ryan.
Ryan acknowledges that in light of recent inflation data, “it’s difficult” to envision the Fed adopting a dovish tone during tomorrow’s decision announcement. Instead, he anticipates the central bank will denounce fears of an impending rate hike but hold interest rates steady amid the elevated inflationary environment “until they see more progress” toward their target.
Turning to consumer spending, Ryan says since the pandemic, “consumer spending has been divorced from consumer confidence.” However, Ryan notes “the important thing to follow” is the labor market, “what’s supporting spending is labor income growth.”

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14 comments
@miltonthomason

What about credit cards. That is the spending

@jerrybrickley2115

This guy should not be saying, "you know",

It makes him sound uneducated.

@Royal-le1ib

The deficit is adding 1 trillion every 100 days so what do you expect. The fed is fueling the inflation rate then complaining about it is insane

@PP-oz2oj

Inflation control doesn’t seem this Fed’s priority.

@mikhailmamontov2155

Feds are doing nothing! And inflation will continue increasing because of that.

@skaulan

Powell has recreated this inflation problem and has prolonged the agony.

@josephpanaro6645

This guy has it right, extreme optimism of 7 cuts (!!) led to irrationality in bond market which now is reverting back to rational levels. Fed barely scraped 3 cuts in forecast but was ultimately split between 2 and 3. Inflation will remain sticky but overall direction of inflation+funds rate will move downwards. Perfectly said that there is little to be happy about for Fed but nothing to be afraid of. Market has titled from overly optimistic to overly pessimistic with the question of rate hikes (!!) on the table. If people believe that re-heating inflation is a threat, imagine the self destructive effect the Fed would cause upon the market with MORE rate cuts on top of an already steep hike to 23 year highs. Worst comes to worst the Funds rate remains higher for longer than projected but ultimately there is dovish direction in market and inflation which was pointed out by economist here.