Fed's Decision To Raise Interest Rates 'Will Be Straightforward' And 'We're Not In A Recession': Fed Governor On Bringing Down Inflation

Zinger Key Points
  • On September 20 and 21, the Fed’s Federal Open Market Committee will confirm the decision to raise the federal funds rate.
  • The strong U.S. labor market puts a question mark on the notion of whether we’re currently in a recession.
Fed's Decision To Raise Interest Rates 'Will Be Straightforward' And 'We're Not In A Recession': Fed Governor On Bringing Down Inflation

Investors are becoming friendlier with the idea of an interest rate hike this month, as more Fed governors continue to express their support for a third yearly increase to the federal funds rate.

Fed Governor Christopher J. Waller spoke on Friday, and his comments add additional certainty to the prediction of another rise to the federal funds rate on September 20.

Earlier this week, several key figures from the Federal Reserve confirmed that bringing down inflation is the body’s main goal and manipulating interest rates, its main tool to achieve that end.

On Wednesday, Fed Vice Chair Lael Brainard said that "we are in this for as long as it takes," while ​​Loretta J. Mester, CEO of the Federal Reserve Bank of Cleveland and a voting member of the committee, expressed that the rate should be above 4% by early next year and remain there throughout 2023.

On Thursday, the European Central Bank confirmed a similar decision to raise the interest rate by 75 basis points to 1.25% in an effort to bring down inflation to 2.3% in 2024.

The Fed, for its part, is looking to do the same, and return to the ideal place of 2% annual inflation. 

“This is a fight we cannot, and will not, walk away from,” said Waller in his speech at the 17th Annual Vienna Macroeconomics Workshop.

Also Read: Bears Go Nuclear With $8B Bet The Market Will Decline — 3x What They Thought in 2008

Recession Or Not?

The Trump-appointed economist said that “the fears of a recession starting in the first half of this year have faded away.”

The country’s gross domestic product has been in decline for two consecutive quarters, in line with many definitions of what a recession should look like. However, the National Bureau of Economic Research —the body in charge of officially declaring a recession in the U.S.— does not share the same definition.

Mainly, it’s the resiliently strong U.S. labor market which puts a question mark on the notion of whether we’re currently in a recession.

In late July, Fed Chair Jerome Powell said that the real reason we’re probably not in a recession “is that the labor market is just sending such a signal of economic strength that it makes you really question the GDP data.”

For Waller, “the robust U.S. labor market is giving us the flexibility to be aggressive in our fight against inflation,” and that means upticking the federal funds rate.

For some financial analyst firms, like The Vanguard Group, the probability of the U.S. entering a recession within the next 12 months is 25%, but that likelihood climbs to 65% within the next 24 months.

However, while the possibility of a recession remains on the table, Waller is increasingly certain that the first half of 2022 didn’t show one.

“I think the argument that we entered a recession in the first half of 2022 has pretty much ended—we didn't,” Waller said. 

“The absence of any indication of a recession in spending or employment data buries that recession argument a little deeper.”

The Federal Funds Rate To Go Up In September

On September 20 and 21, the Fed’s Federal Open Market Committee will confirm the decision to raise the federal funds rate by either 0.5% or 0.75%, putting the funds rate range at between 3% and 3.25%.

Supply has been hit hard by sequels of the pandemic, the war in Ukraine and further shocks to the food, energy, and semiconductor sectors.

“The FOMC's goal is that the tightening in monetary policy slows aggregate demand so that it is in better alignment with supply across all sectors of the economy,” explained Waller.

If the spike in interest rates is confirmed, businesses should prepare for reduced demand until the market reaches a point of balance with today’s disrupted supply chain.

For many businesses, a push on growth is becoming the main strategy for hedging against upcoming drops in demand.

Waller said he’s in support of “a significant increase” to interest rates that would further slow down demand and allow inflation to decrease by balancing it with today’s shrunk supply: the current imbalance between strong demand and a supply that struggles to get back to regular levels is believed to be the main root of inflation.

Waller said that based on all of the data that the government has received since the FOMC's last meeting, he believes the policy decision at the September meeting “will be straightforward.”

The official is in favor of tightening monetary policy into 2023, but urged his colleagues to act only on incoming data. For him, only hard data can answer the questions of "how high?" and "for how long?"

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Posted In: Christopher J. WallerFederal Open Market CommitteeJerome PowellLael BrainardNewsPoliticsEconomicsFederal ReserveGeneral

11 Best Black Friday Deals on Amazon

11 Best Black Friday Deals on Amazon

The best Black Friday deals from Amazon are still coming hard and fast because the holiday is not yet upon us and the mega-retailer prefers to keep consumers on the hook for as long as possible—spending as much money as possible. 

To that end, here are some of the best Black Friday deals from Amazon that you might want to consider today.

Calphalon 10-Piece Pots and Pans Set

Regular Price: $172

Sale Price: $138.88

Calphalon’s 10-Piece Pots and Pans Set is designed with stainless steel, stay-cool handles along with pour spouts. The nonstick surface is PFOA-free and built with hard-anodized aluminum that is both durable and conducts heat extremely well. The set includes 2 fry pans, a sauce pan with cover, saute pan with cover and large stock pot with cover.

Apple AirPods 2nd Generation

Regular Price: $144

Sale Price: $85.49

The 2nd Generation AirPods from Apple connect to all Apple devices and give you an enhanced listening experience. Plus, they come with a case that keeps them safe and allows you to charge them in a secure environment. With over 24 hours of battery life, access to Siri and easy setup, you can start listening to your favorite tunes or podcasts today.

Adidas Ultraboost 21 Running Shoes

Regular Price: $129.98

Sale Price: $89.98

The Adidas Women’s Ultraboost 21 running shoe is perfect for anyone who likes a short run, maybe a 5K, half marathon or more. Coming in several colors and styles, you can slip these shoes on, enjoy the cushioned outsole, sink into the supple insole and secure laces.

Ninja AF101 Air Fryer

Regular Price: $129.99

Sale Price: $97.83

The Ninja AF101 Air Fryer allows you to crisp, roast, reheat and even dehydrate food products faster and cheaper than ever before. It has a 4-quart capacity and offers a wide temperature range along with several time settings so that you can customize each dish to your needs. Plus, all the parts are dishwasher safe.

Beats Solo3 Wireless On-Ear Headphones

Regular Price: $199.95

Sale Price: $99

Beats by Dr. Dre are among the best headphones on the market, and the Solo3 Wireless On-Ear Headphones include the Apple W1 chip, Class 1 Bluetooth and 40 hours of battery time. These headphones even have a built-in microphone and offer an adjustable fit so that you can be comfortable whether you’re listening to an Android or iOS device.

Hoover Power Scrub Deluxe Carpet Cleaner

Regular Price: $198.98

Sale Price: $175.98

The Hoover Power Scrub Deluxe Carpet Cleaner allows you to keep your home spotless and clean up after your pets. The cleaner comes with the Hoover Paws and Claws Deep shampoo and a storage mat to keep the floor dry once it’s put away.

LG CordZero Auto Empty Cordless Stick Vacuum

Regular Price: $999.00

Sale Price: $851.71

The LG CordZero Auto Empty Cordless Stick Vacuum and Wet Mop All in One Tower is designed to work in homes with several pets or children and clean up all the messes that life brings. The battery lasts up to 2 hours, and there’s an extra removable battery that gives you even more cleaning time and power.

Breville Fresh and Furious Blender

Regular Price: $278.60

Sale Price: $199.95

Breville, a top name in blenders and juicers, offers the Fresh and Furious Blender, featuring 50-ounce capacity, Vac Q technology, pre-programmed cycles, LCD display and lid with pull ring. With the Fresh and Furious Blender, you can make everything from a smoothie to a soup and everything in between.

Hot Tools Professional 2000 Turbo Ionic Hair Dryer

Regular Price: $89.99

Sale Price: $55.63

The Hot Tools Professional 2000 Turbo Ionic Hair Dryer is designed for professional use, but it works perfectly in the home. With 1875 watts of power, 6 heat and speed settings and a lightweight design, you can easily style your hair and utilize the diffuser, cut back on the frizz and stretch the 8 ft cord for maximum functionality.

Columbia Heavenly Long Hooded Jacket

Regular Price: $160

Sale Price: $97.38

The Heavenly Long Hooded Jacket from Columbia is designed to be light for everyday use, but it’s heavy enough to protect you from the cold. The plush fleece lining, security pocket, water resistant fabric, 2-way zipper, and zippered hand pockets make the jacket both protective and functional.

ConAir InfinitiPro Hair Dryer

Regular Price: $49.99

Sale Price: $29.99

ConAir is one of the biggest names in hair and beauty, and the InfinitPro is an 1875 watt hair dryer designed for professionals with ceramic technology. The dryer comes with a diffuser and concentrator, and it allows you to blow out your hair just the way they would at the salon.

Deals the Experts Are Hoping For

Experts believe that Amazon’s Black Friday sale could linger for quite some time. It all started with the Prime Early Access sale on October 11 and 12. Previously, Amazon has offered the “Epic Deals” sale that ran through late October. 

This is to say that any sale could come up at any time. 

Even so, those monitoring Amazon are looking forward to a few potential deals, including:

  • Apple Watch
  • AirPods (any generation)
  • MacBook Pro
  • Large, underpriced TVs
  • Amazon Echo
  • More small home appliances (Dyson or Shark vacuums, Instant Pots, etc.) 

While these predictions are based on last year’s Amazon Black Friday Sale, it’s important to remember that most Black Friday sales are fairly consistent and push the products that are most likely to sell.

 

Featured image sourced from Shutterstock

Posted In: Partner ContentGeneral