DBG - The Federal Reserve's September "stay put" may be a foregone conclusion!

Fed officials hinted ahead of this month's policy meeting that they may begin to slow down in their fight against inflation as the labor market weakens and inflation falls back from epidemic-era highs.

This could mean that the Federal Reserve will most likely choose to pause interest rate hikes this month, but officials have also warned that this couldIt doesn't mean the Federal Reserve has finished raising interest rates。

Logan, president of the Dallas Fed, said that "at this stage, I believe we have to gradually weigh the risks of too much inflation against the risks of too much depressing the economy", adding:

"Another skip later this month may be appropriate but it does not mean a complete halt to rate rises and further assessment of the data and outlook in the coming months may confirm that we need to do more to contain inflation."

Logan's comments echoed those of other Fed officials. Boston Fed President Collins said on September 6,The Federal Reserve should take its time as it seeks to lower inflation, warning that further rate hikes may be necessary。

In a speech, Mr. Collins said "this phase of our policy cycle requires patience and a comprehensive data review, while we stay the course" and that "while we may be near, or even at, the peak of policy rates, further tightening may be warranted based on forthcoming data".

San Francisco Fed President Daley also said in an interview in August,Although inflation is falling, it is still too high, and there is still more work to be doneDaley left a variety of options Daley said:

"Whether we raise rates again or keep them stable for a longer period of time remains to be decided."

In July, Federal Reserve officials raised interest rates for the 11th time since March 2022, and according to June forecasts, another rate hike is likely for the rest of the year. Officials' forecasts will be updated later this month.

The Federal Reserve will hold its next policy meeting on September 19-20, and officials are widely expected to keep interest rates unchanged at a range of 5.25% to 5.5% to see if inflation data continue to show signs of cooling.

Inflation.The Fed has made a lot of progress.Inflation has fallen to nearly 3% from a high of more than 9% last yearCore inflation remains around 4%, twice the Federal Reserve's inflation target。

The Fed's "favorite measure of inflation," the core PCE price index, rose 4.2% year-on-year in July, up from 4.1% in June but down from a range of 4.5% -4.6% in the first half of the year. Another measure of inflation, the core CPI, rose 4.7% in July, its lowest level since October 2021. The August CPI report will be released on Wednesday.

Job growth is also coolingThe U.S. economy added 187,000 jobs in August, compared with 105,000 in July and 157,000 in June.

Although the report shows some cooling trends, the U.S. economy remains stronger than expectedIt is too early to tell whether inflation will continue to return to 2%。

Federal Reserve Chairperson Jerome Powell said at the central bank's annual meeting in Jackson Hole,The Fed is "able to proceed cautiously" as it considers future actions, while also putting rate-hiking options directly on the tableHe said:

"While inflation has come down from its peak - a welcome development, it is still too high. We are prepared to raise interest rates further where appropriate and intend to maintain policy at restrictive levels until we are confident that inflation is falling sustainably towards our objective."

However,Powell left room for the Federal Reserve to continue monitoring the impact of its rate hikes before further increases."Since the Jackson Hole central bank's annual meeting a year ago, the committee has raised the policy rate by 300 basis points, including 100 basis points over the past seven months," Powell said. "We have significantly reduced the size of our bond holdings, and broad estimates of those lags suggest that,There could be further significant drag on the economy”。

However,The Fed remains divided on how to reduce inflation to its 2 per cent target，DBG ForexThey believe that because some members believe that the full effect of the Federal Reserve's rate hike has not yet been realized, interest rates should be maintained at current levels.

Atlanta Fed President Robert Bostic said on Aug. 31 that he doesn't think interest rates need to be raised further, but that the Fed should keep rates high because inflation is still too high. "I think policy is appropriately restrictive at the moment," he said at a conference in Cape Town, South Africa. "WeOne should exercise caution and patienceLet restrictive policies continue to affect the economy.Lest we risk over-tightening and causing unnecessary economic pain”。

Bostic added that this does not mean he supports a near-term rate cut.

Philadelphia Fed President Harker also hopes to stabilize interest rates at this level for a period of timeHe said in an interview at the central bank's annual meeting in Jackson Hole that the Federal Reserve is likely to keep interest rates unchanged in September and hold them there for a longer period of time, allowing previous rate hikes to continue to reduce inflation. He said:"I think that's it for now. Let's see how things develop."