Home Sale Prices In Chicago Are Finally Trending Down
The incoming year will provide good news for Chicago homeowners as home sale prices are finally heading downward.
(Bloomberg)— Officials from the Federal Reserve announced their fourth consecutive 75 basis-point increase in interest rates while also hinting that their vigorous campaign to fight inflation may be nearing its conclusion.
In its statement following a two-day meeting, the Federal Open Market Committee stated that "ongoing hikes" will probably be required to raise rates to a level that is "sufficiently restrictive to return inflation to 2% over time."
The Federal Reserve also added the following new sentence to its statement: "In determining the pace of future increases in the target range, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."
Despite significant slowdowns in industries like housing and manufacturing, statistics on inflation and employment remain high.
As a result of the unanimous decision, the benchmark federal funds rate is now expected to be between 3.75% and 4%, which is the highest level since 2008.
The S&P 500 index increased, the dollar index declined, and two-year Treasury yields fell.
The amount of pricing in for the December policy meeting was reduced by swaps traders, who also lowered their estimate of the top rate for the cycle from about 5.05% earlier on Wednesday to around 5%. The declaration reaffirmed policymakers' commitment to their fight against inflation while also acknowledging the fact that interest rate hikes take time to take effect.
At his press conference in Washington at 2:30 p.m., Chair Jerome Powell will have the opportunity to go into further detail on the prospects for next meetings.
He will be questioned by investors on whether the Fed will limit the rate of interest rate rises at its next meeting in December.
Officials convened days before midterm US legislative elections in which outrage over pricing pressures has been a recurrent issue in an effort to reduce inflation, which is approaching a 40-year high.
President Joe Biden's Democrats may lose control of Congress as a result of the election results on November 8, and several well-known members of his party have already begun openly pleading with the Fed to exercise moderation.
For his part, Powell has made an effort to keep the central bank out of the political scuffle.
In line with expectations, officials declared they will keep selling off their Treasury bonds and mortgage-backed assets at the anticipated rate of around $1.1 trillion annually.
The Fed's task gets more challenging when interest rates rise. Officials are aware that monetary policy has a lag and that the tighter it is, the more it lowers not only inflation but also economic growth and hiring. This is because they have faced criticism for failing to recognize the persistence of the inflation increase.
According to the median prediction, September Fed predictions indicated a downshift to 50 basis points in December.
At this meeting, no new estimates were presented, and they won't be revised again until officials meet again on December 13–14, when they will have two more months' worth of employment and consumer inflation statistics at their disposal.
Bloomberg surveyed economists late last month, and while the majority predicted a 50 basis-point increase for December, over a third had predicted a fifth increase of 75 basis points. Next year, they anticipated a 5% rate high.
Investors observed a similar trajectory: rates peaked just above 5% in 2023, with pricing in financial futures markets earlier on Wednesday ranging between a 50 and 75 basis-point increase in December.
Some areas of the economy, particularly the housing market, are starting to cool as a result of the Fed's most ferocious tightening campaign since the 1980s. But there hasn't been much of an improvement in inflation for policymakers.
The job market hasn't really loosened up either; in September, the unemployment rate matched a half-century low of 3.5%.
According to Labor Department data released on Tuesday, employer demand for workers has also remained high, with 1.9 job openings for each unemployed individual in America.
From: Insurance Crain's