Slow and steady may win the race, but in the case of current monetary policy, it also raises the rates. Federal Reserve Chairman Jerome Powell said in a speech at the central bank’s annual retreat in Jackson Hole, Wyoming that a gradual rate hike is to be expected.
“I see the current path of gradually raising interest rates as the (Federal Open Market Committee’s) approach to taking seriously both of these risks,” said Powell. “As the most recent FOMC statement indicates, if the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate.”
Related: Meeting Minutes Suggest Fed Likely to Raise Rates
With a tailwind of strong economic data and a stock market that boasts the longest bull run in the S&P 500, the prevailing sentiment continues to be that the Fed would continue to raise rates. Per MarketWatch, current market odds are showing a 96% probability of a rate hike in September and 60% chance of another in December.
The announcement will most likely catch the ire of U.S. President Donald Trump who once again took jabs at Federal Reserve Chairman Jerome Powell for raising interest rates, telling political donors at a fundraiser in the Hamptons that he hopes the Fed Chair eases up on monetary policy.
So far during President Trump’s tenure, the Fed has hiked interest rates fives times versus just once during former president Barack Obama’s tenure. With major stock market indexes closing in on record highs, the prevailing sentiment is that two more interest rate hikes will occur prior to the end of 2018.
“He (Trump) was questioning why it was happening,” one person at the event said, according to a Dow Jones report. “He made a reference to things going so well, so why bother” raising rates.
In an interview with CNBC, U.S. President Donald Trump unsurprisingly made his discontent known publicly, saying he’s “not happy” about the Federal Reserve’s latest monetary policy moves to raise interest rates. In typical Trump fashion, the president took to social media to say that the U.S. “should not be penalized because we are doing so well.”
….The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates – Really?
— Donald J. Trump (@realDonaldTrump) July 20, 2018
Related: Richmond Fed President Says Rates Must Keep Rising
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