{"id":1985980,"date":"2023-07-29T19:27:02","date_gmt":"2023-07-29T23:27:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/endgame-for-feds-tightening-cycle-challenged-by-easing-financial-conditions\/"},"modified":"2023-07-29T19:30:21","modified_gmt":"2023-07-29T23:30:21","slug":"endgame-for-feds-tightening-cycle-challenged-by-easing-financial-conditions","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/endgame-for-feds-tightening-cycle-challenged-by-easing-financial-conditions\/","title":{"rendered":"Fed&#8217;s tightening cycle challenged by easing financial conditions, potentially ending the cycle."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fendgame-for-feds-tightening-cycle-challenged-by-easing-financial-conditions%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1985980&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div class=\"entry-content\">\n<p>  (This\u200b July 28 \u2062story has been refiled to remove the garbling in paragraph 2)<\/p>\n<p>By Michael S. Derby<\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\" style=\"min-width: 320px; min-height: 50px;  text-align: center;\">  \t<script>  \t\tgoogletag.cmd.push(function() { googletag.display('div-gpt-ad-1663871513696-art-1'); });  \t<\/script>  <\/div>\n<div class=\"ad-slot__ad-label\">Advertisement<\/div>\n<\/p>\n<p><h2>Financial Conditions May Influence Fed&#8217;s Rate Hike Decision<\/h2>\n<\/p>\n<p>(Reuters) \u2013 Less tight\u2063 financial conditions\u2064 as \u200bexhibited by the red-hot stock market may increase the \u200dchances that the Federal \u200bReserve \u200bhikes rates \u200cagain before the end \u2062of the year, some economists reckon, even as\u200d financial markets put \u200clittle odds on that happening. <\/p>\n<p>Several measures of\u2064 financial conditions, including those produced \u200bby the\u2063 central \u2062bank, have shifted \u200din way that\u200b signals\u2062 reduced \u2062restraint on\u2063 the economy, at\u200b a time when central bank officials believe \u2062more \u200dwork may be needed to lower\u200b inflation.<\/p>\n<p>Taking in to account everything from stock prices to measures of borrowing costs for the government, businesses and households, \u2063financial conditions matter\u2064 to monetary policy. \u2063That is because the \u2064Fed relies on markets to transmit changes in its\u2062 <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/parts-of-the-yield-curve-just-inverted\/\" title=\"Parts of the Yield Curve Just Inverted\">short-term interest rate target<\/a> to the broader\u200b economy. <\/p>\n<p>The\u200c current\u2062 slackening in these gauges\u200d means markets and the Fed are \u2062starting to\u200c go on separate paths. <\/p>\n<p>\u201cEasy\u200d financial conditions obviously boost near-term growth,\u201d and can \u2062encourage more risk-taking of the sort that can lean against the restraint\u2063 the Fed\u200b is trying to \u2062impose on the economy, said Benson Durham,\u200c head of global policy at Piper Sandler. <\/p>\n<p>On Friday, the \u2064Federal\u200b Reserve reported that its Financial Conditions Impulse on Growth for \u200dJune moved to 0.458, \u2063from May\u2019s 0.603 reading. \u200dThe index, now\u200b the lowest since August 2022, seeks to describe whether financial conditions\u2062 are aiding or \u2064restraining growth,\u2064 so the latest\u200b reading points \u200dto them providing less drag on the economy. <\/p>\n<p>Meanwhile, Goldman Sachs\u2019 closely watched Financial Conditions Index has \u200bbeen easing\u2063 fairly steadily since May. As of the end of July, that measure was also at levels last\u2062 seen in late August of last year, while the\u2064 Chicago Fed\u2019s latest index has\u2064 also pointed\u200d to easier conditions. <\/p>\n<p>Since March of last year, the Fed has been engaged in a historically aggressive \u200dcampaign\u2062 of <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/endgame-for-feds-tightening-cycle-challenged-by-easing-financial-conditions\/\" title=\"Fed's tightening cycle challenged by easing financial conditions, potentially ending the cycle.\">short-term interest\u200d rate increases<\/a>, taking its target\u2062 rate\u200b from near zero levels \u200bto\u200b between \u20645.25%\u200d and 5.5% after \u2064a \u2062quarter percentage-point increase on Wednesday.\u2064 <\/p>\n<p>An explicit\u200b goal has been \u2062to tighten financial\u200b conditions.  Mortgage rates\u2063 have soared to around 7%,\u2064 while other borrowing costs are up. Rate hikes also slammed the stock market, at \u2064least\u200d for a time, \u200dwhile pushing up the dollar relative to other currencies.\u2063 <\/p>\n<p>Tighter\u200c financial conditions\u2064 have\u2064 helped accomplish\u200b the Fed\u2019s desire to slow down the economy in a bid to lower inflation pressures from multi-decade highs. But now things are shifting the\u2062 other way, which\u200c could create issues for the Fed as it approaches \u2062the endgame \u2063for its tightening cycle. <\/p>\n<\/p>\n<p><h3>Fed \u2062Will &#8216;Get to Where We Need to\u2064 Go&#8217;<\/h3>\n<\/p>\n<p>The various gauges on balance show financial\u2064 conditions reached their most restrictive \u200blevels late last \u2064year,\u200b and have receded since. That dovetails with\u2063 a\u200d stock market rally that has pushed up the benchmark S&#038;P 500 Index by nearly 20% so far\u2064 this year. \u2063Meanwhile, yields\u200b on the riskiest corporate debt securities \u2062\u2013 so-called junk bonds \u2013 have fallen by \u200babout 1.2 percentage points \u200dsince last autumn even \u200bas the Fed kept <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/federal-reserve-delivers-bad-news-about-expectations-for-inflation-raising-interest-rates-report\/\" title=\"Federal Reserve Delivers Bad News About Expectations For Inflation, Raising Interest Rates: Report\">raising interest rates<\/a>.<\/p>\n<p>Fed Chair\u2062 Jerome Powell, who has regularly faced questions about financial market expectations diverging from officials\u2019 outlooks, brushed \u2063off easier \u2063financial conditions in this week\u2019s press conference\u200c that followed the Federal \u200cOpen \u200cMarket Committee meeting. He attributed \u200ceasier financial\u2062 conditions to the \u2063stock market rally and a \u2063weaker dollar, and appeared to view the current situation as one that will work itself out over time. <\/p>\n<p>\u201cWe will do \u200cwhat it takes to get inflation down \u200band\u2062 in principle, that could mean that\u200c if financial conditions \u200cget looser, we have to do more,\u201d Powell\u2063 said. \u201cBut what tends to happen, though, is \u200dfinancial conditions get in and out of alignment \u2063with what \u200dwe\u2019re doing, and ultimately \u2062over\u2063 time we get where we\u200c need to\u2062 go.\u201d<\/p>\n<p>Powell \u2063noted in \u2063the press conference\u2063 that\u200d it is a\u2063 tossup as to whether the\u200c Fed\u200d raises rates or holds \u2062steady in September. He offered no views on whether the central\u200d bank will be able to \u200bboost \u2063by another \u200cquarter percentage point by year\u2019s end, as June \u200dFOMC forecasts predicted. <\/p>\n<p>Piper Sandler\u2019s Durham said the easier financial conditions make the odds of another rate rise higher by \u2064year\u2019s end, in contrast with the current market outlook. This\u200d easing gives officials \u201cthe space and the breathing room\u201d to bump rates up \u2062again, especially in an \u2062economy that is otherwise doing very well despite aggressive increases. <\/p>\n<p>Bank of America economists said in\u200d a note on Thursday that\u200c they believe market pricings show an \u2063underestimation of what the central bank needs to do on rates. They said easing inflation in \u2062the face of \u200dstill-strong jobs data and better-than-expected \u2062growth \u201care likely \u200bto keep the Fed worried \u2063that its policy stance is insufficiently restrictive.\u201d<\/p>\n<p>Still, \u2064the Fed may yet find space not to hike \u200brates again. Even as many key\u2063 aspects of the \u2064economy have remained strong in the \u2062face of higher rates, inflation pressures are \u200deasing.\u2064 On\u2062 Friday, the \u2063government reported that inflation\u200b pressures last month and\u2063 employment costs in second \u200cquarter\u200d eased. <\/p>\n<\/p>\n<p>  (Reporting\u200d by Michael S. Derby in New York; Editing by Dan Burns and Matthew Lewis)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/endgame-for-feds-tightening\/attachment\/file-photo-federal-reserve-chair-jerome-powell-speaks-about-interest\/\"><\/a><\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>Authorities slap charges against Alabama nursing student Carlee Russell for faking her own kidnapping.<\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>Democrat \u200band Republican legislators are joining forces, to analyze\u2062 Joe\u2062 Biden\u2019s Afghanistan withdrawal. <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>The Hunter \u200dBiden Case\u2063 Judge lays down\u200d the Law, while Joe denies Secret Service protection to RFK \u2062Jr.<\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>As the 2024 elections heat up, multiple outlets are making their predictions, \u2064over who \u2062will win the presidency. <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>By David Shepardson (Reuters) -The backup safety \u200ddriver behind the wheel of a \u2063self-driving Uber Technologies test \u2064vehicle that struck and \u2062killed\u2026 <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>(Reuters) -Elon \u2063Musk said on Friday\u2064 monthly users of social media platform X, formerly known as Twitter, reached a \u201cnew high\u201d and\u2026 \u200b <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>(Reuters) \u200d\u2013 U.S. President Joe Biden is planning to sign\u200b an executive order to\u2062 limit critical U.S. \u2062technology investments in China by\u2026 <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>By Joyce Lee\u2064 SEOUL (Reuters) -From\u200b Intel\u2063 to Samsung,\u200d global \u2062chipmakers are celebrating \u200bthe beginning of the end of\u200c a semiconductor supply\u2026\u200c <\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>conditions remain uncertain. The strong performance of the stock market suggests a potential rate hike by the Federal Reserve before year-end, according to economists. However, the overall financial landscape remains unpredictable.<\/p>\n","protected":false},"author":66,"featured_media":1985981,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[542],"tags":[],"class_list":["post-1985980","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oann"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1985980","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1985980"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1985980\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1985981"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1985980"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1985980"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1985980"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}