Is the Timing of Fed Rate Hikes Still Disputed? Officials Diverge on Financial Conditions

Odaily News: The Federal Reserve is expected to keep interest rates unchanged this week, but officials still hold notable differences over whether financial conditions are sufficiently restrictive. This debate is becoming a key factor in determining whether the Fed needs to continue raising rates and when it should take its next step.

Some Fed policymakers believe that although U.S. Treasury yields have risen significantly, stock prices, credit supply, and corporate investment activity indicate that overall financial conditions remain relatively loose and are not enough to effectively curb inflation. Other officials are paying more attention to economic data and believe they can wait for further evidence before adjusting rates.

The Federal Reserve will conclude its two-day monetary policy meeting in the early hours of Thursday Beijing time. The market generally expects policymakers to keep the federal funds rate target range at 3.75% to 4.00%, after the Fed unanimously agreed in September to raise rates by 25 basis points. Investors currently expect the next rate hike may occur at the meeting on December 8-9.