Will the Federal Reserve hike interest rates sharply again at its next meeting? Experts expect this step. In any case, in the US Federal Reserve's economic report, companies are rather pessimistic about their economic situation - there are several reasons for this.
According to a survey by the US Federal Reserve, the US economy grew moderately. However, according to the Federal Reserve's Beige Book economic report, there are clear differences between the individual sectors and central bank districts. Economic activity has slowed in two districts, with slowing or weak demand due to higher interest rates, inflation and supply chain disruptions. Overall, companies are becoming more pessimistic.
According to the Fed, employment rose moderately in most districts, with some reporting a slowdown in demand for labour. Concerns among companies about an economic downturn are growing. The prices are still high, it is said. Significant cost increases have been recorded in a number of sectors. However, it is generally expected that price increases will weaken.
The US Federal Reserve prepares the next meeting with the Beige Book. It is a summary of comments from the twelve US regional central banks reporting on the current economic situation in their respective regions. The next Fed rate meeting is on November 1st and 2nd.
Futures markets are pricing in a 75 basis point rate hike at over 90 percent for this session. In the fight against high inflation, the US Federal Reserve is pursuing an aggressive course. In September, the Fed raised interest rates for the third time in a row by 75 basis points to the new range of 3.00 to 3.25 percent.
The US economy went into reverse gear in the first half of the year as a result of the energy crisis and the ongoing supply bottlenecks. Experts surveyed by Reuters expect the next week's figures on gross domestic product in the third quarter to return to growth: they expect an annualized increase of 2.0 percent after a 0.6 percent decline in the spring.
At the same time, the Fed is confronted with a high inflation rate of 8.2 percent recently. It has been driving up the key interest rate in large steps for months in order to curb inflation. This has raised concerns in the markets that overly aggressive monetary policy could stall the economy.
