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Federal Reserve Likely To Dial Back Rate Hikes But They’re Far From Over

The Federal Reserve System’s aggressive rate-hike campaign of 2022 is likely to be dialed back when U.S. central bankers meet in two weeks but is far from over.  

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Federal Reserve Chair Jerome Powell, in a speech today at the Brookings Institution, said a 50-basis-point rate hike would be on the table at the Fed’s December 13 and 14 policy meeting. Since March, the nation’s central bank has raised lending rates six times. After a quarter-point hike in March and a half-point hike in May, the Fed hiked rates four more times by three-quarters of 1% in an aggressive effort to end inflation by slowing economic growth.

Fed chair Powell’s remarks offered no big surprises but did go into more detail than previous public pronouncements about how a shortage of workers is making inflation harder to control. Here’s a summary of important points investors need to understand:

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“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” Mr. Powell said. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.”

It is likely that restoring price stability will require holding policy at a restrictive level for some time. History cautions strongly against prematurely loosening policy,” Mr. Powell said.  “We will stay the course until the job is done.”


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