The US inflation rate has reached the same level as the Fed funds rate, but the central bank is not yet comfortable with a pause.
the Federal Reserve funds rate of 5 per cent.
That means the Fed is still not yet comfortable with a pause. Financial markets agree, and are placing a 67 per cent chance of another 25 percentage point rate rise at the May 2-3 meeting.allowing a resurgence of inflation.Furthermore, the Fed is also showing less concern than some, including IMF chief economist Pierre-Olivier Gourinchas, about the impact on the economy and inflation from collapsed banks and tightening credit.
“Fed members [John] Williams along with [James] Bullard, [Thomas] Barkin and [Patrick] Harker suggested that while it is possible, they are not yet seeing evidence that will be the case. We agree with that assessment,” Hollenhorst said. “The net share of small businesses raising selling prices continued to decline to 37 percentage points, the lowest since April 2021.”declined sharply.”the time of financial stress, supporting our view that financial stress in the banking sector is disinflationary.”
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