Saturday, August 23, 2025

Fed Officials Expected to Hike Rates Another 25 Basis Points

The Federal Reserve is expected to conclude its two-day policy meeting on Wednesday, and markets are expecting yet another rate hike— albeit at a more modest pace this time.

Markets are betting there is a 98% probability of a 25 basis-point rate hike, as policy makers trudge deeper into one of the most aggressive tightening cycles since the Volcker era. If rates do in fact increase for the eighth consecutive time, the Feds fund rate will sit at a range between 4.50% to 4.75%, making borrowers pay even more on credit card interest, student debt, and mortgage loans.

However, following four straight 75 basis-point moves and December’s 50 basis-point hike, incoming inflation data suggests price pressures are finally beginning to taper. The PCE index increased 5% year-over-year in December, and 0.1% from the month prior. However, core PCE, which doesn’t account for volatile components such as food and energy, rose 4.4% in 12 months, marking a slight decline from November’s 4.7% annual gain. On a three-month basis, core PCE was up 2.2%, and 3.7% during the six-month period ending in December.

“The argument is just whether you should pause after three months of data or pause after six months of data,” commented Fed Governor Christopher Waller earlier this month, as cited by Bloomberg. “From the risk management side— I need six months of data, not just three.” Indeed, Inflation stood at an annualized 6.5% in December, marking the smallest 12-month increase since October 2021. “The good news is that the worst is over,” said Columbia University Business School assistant finance professor Yiming Ma, referring to the Fed’s hiking cycle.

“The messaging shifts— before it was you’ve got to get moving quickly and hunker down because we’re going to be jacking rates,” said Deutsche Bank senior US economist Brett Ryan as quoted by Bloomberg. “Now it’s not about the pace, it’s about the end point and we have to feel our way around where the end point is.” A chorus of Fed officials forecast in December that interest rates would reach a peak between 5% and 5.25% to conclude the hawkish tightening cycle, suggesting two more quarter-point hikes are still pending.

“Even after we have enough evidence to pause rate increases, we’ll need to remain flexible and raise rates further if changes in the economic outlook or financial conditions call for it,” said Dallas Fed President Lorie Logan in a speech.

Information for this story was found via Bloomberg, CME Group, CNBC, Twitter, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

A Medical Breakthrough the Market Overlooked | David Elsley – Cardiol Therapeutics

Why Grade Beats Size in Silver Mining | Frank Basa – Nord Precious Metals

Are Investors Missing the Start of the Next Commodity Supercycle? | Morgan Lekstrom – NexMetals

Recommended

Emerita Resources Expands El Cura Drill Program By 10,000 Metres As Deposit Remains Open For Expansion

ESGold Signs MOU For Tailings Project In Colombia With Grades Up To 42 g/t Gold, 280 g/t Silver

Related News

US Private Payrolls Disappoint Despite ADP’s Revised Methodology

In further testament that the labour market is rapidly losing momentum despite assurances from the...

Wednesday, August 31, 2022, 01:02:29 PM

Inflation Picks up 3.7% in July, Creating Dilemma for Liberal Party

Price pressures across Canada accelerated by the most in nearly a decade, threatening to create...

Thursday, August 19, 2021, 02:35:00 PM

Bank of Canada Maintains Interest Rates At 5% Again At January Meeting

The Bank of Canada has maintained its overnight rate at 5%, continuing its quantitative tightening...

Wednesday, January 24, 2024, 10:54:09 AM

The Manchin Surprise: US Senator Now Supports Biden’s “Inflation Reduction” Tax Agenda

It has been called by many names but US President Joe Biden’s attempt to enact...

Saturday, July 30, 2022, 09:00:00 AM

Fighting The Inflation Fire With Gasoline – The Daily Dive

Starting off the week on the Daily Dive is that of returning guest Lobo Tiggre,...

Monday, March 28, 2022, 01:30:00 PM