Fed Raises Rates to 3.75-4% as Warsh Rejects Labor-Market Harm for 2% Inflation

MacroDigital Finance Impact 4
โดย 247wallst.com·US·Read original
Summary · why it matters

The Federal Reserve raised its benchmark rate by a quarter percentage point to a target range of 3¾ to 4 percent, with Chair Kevin Warsh declaring that the central bank does not need to harm the labor market to bring inflation down to its 2% goal. Warsh said "the plain fact is that inflation is too high and has been for too long," that he would be hard-pressed to call broad financial conditions restrictive, and that the Committee had "removed a dose of accommodation." A UBS research note led by economist Jonathan Pingle called that phrasing much stronger wording than the market expected, and argued Warsh's policy response function has shifted versus prior Fed chairs, becoming more sensitive to financial conditions and less sensitive to the labor market. The Summary of Economic Projections shows a median path of real GDP growth of 2.3% this year and 2.4% next year, with total PCE inflation at 3.7% this year falling to 2.3% next year and a median appropriate policy rate of 4.1% at year-end. Warsh, who said he has not offered a projection of his own, described a unanimous Committee vote, said inflation risks skew to the upside while labor risks are roughly balanced, and cited a 4.1% jobless rate along with rising job openings and hours in calling the labor side of the mandate "in good shape."

Impact on stocks 3

Financials▲ · 1 stocks
UBS Group AG
UBSG
± MixedCapitalrelevance

UBS is cited only for its research note on Warsh's policy reaction function, not for any company-specific development.

Others▲ · 2 stocks
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