After Powell's 'Muddled' Message, Economist Thinks Fed Minutes May Clarify 'Awkward' June Meet Outcome

The Federal Reserve is set to clarify the discussions from their June meeting that left Wall Street puzzled, Bloomberg reports. The Federal Open Market Committee halted its interest-rate hikes after 10 consecutive increases over 15 months, despite inflation cooling at a slower pace than anticipated. Simultaneously, policymakers predicted two more hikes this year, which left investors further perplexed.

According to Kathy Bostjancic, chief economist at Nationwide Life Insurance Co., the central bank and Chair Jerome Powell "have delivered a muddled message, and I assume it reflects an uncomfortable compromise between the hawks and doves on the committee."

"The minutes might provide insight on that, but it might simply repeat the awkward explanation Powell has offered," said Bostjancic.

Despite the uncertainty, a July rate hike is likely, as it would be challenging for the Fed to maintain the hiking cycle if they don’t increase rates in two consecutive meetings, noted Derek Tang, an economist with LH Meyer/Monetary Policy Analytics. However, the minutes are expected to maintain flexibility, with a potential peak rate higher and a wide range of views on the appropriate timing.

The Fed will receive two key economic reports before the July 25-26 meeting: the June employment report and consumer price readings for the same month. Policymakers have been more focused on core prices, which exclude food and energy, and these have risen 4.6% from May 2022, compared with 3.8% for the broader gauge.

Read Also: Fed’s Rate Hike Pause Fails To Dissuade Bond Traders From Betting On A Recession — Here’s Why

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