Federal Reserve Notes “Tighter” Conditions

Posted on 11/28/2023

The U.S. Federal Reserve released its latest minutes suggesting a strong U.S. economy overall that is losing some shine around the edges. According to the Fed: “Recent indicators suggest that economic activity expanded at a strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low.” Worryingly for the Fed and consumers, “Inflation remains elevated.” It appears the higher for longer mantra regarding interest rates will continue to be a factor, for the time being.

Happily for the banks, “The U.S. banking system is sound and resilient.” Again, though, the Fed suggested a dark cloud is looming: “Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.”

Chair Jerome Powell’s upcoming appearance, a fireside chat at Spelman College, will be closely monitored for signs of potential rate reductions, which are anticipated to occur in 2024 by many, including Deutsche Bank and Bank of America.

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