{"id":1996476,"date":"2023-08-10T11:07:02","date_gmt":"2023-08-10T15:07:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-economy-in-uncharted-waters-fed-staff-warn\/"},"modified":"2023-08-10T11:10:26","modified_gmt":"2023-08-10T15:10:26","slug":"us-economy-in-uncharted-waters-fed-staff-warn","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-economy-in-uncharted-waters-fed-staff-warn\/","title":{"rendered":"Fed staff warns that the US economy is in uncharted waters."},"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\">22<\/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%2Fus-economy-in-uncharted-waters-fed-staff-warn%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=1996476&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>\n<h2>Uncharted Waters: Fed Officials Navigate Unprecedented Rate Cycle<\/h2>\n<blockquote>\n<p>U.S. Federal Reserve officials\u2062 are in &#8220;<span data-qa-component=\"highlight-text\">uncharted<\/span> waters&#8221; with no clear\u2063 historical guide as they set monetary policy in an environment with inflation falling \u200bbut no increase \u2063as yet in the unemployment rate, Richmond Fed staff said in a new research note analyzing a central bank rate cycle they deemed &#8220;unlike any other.&#8221;<\/p>\n<\/blockquote>\n<p>&#8220;The current cycle is the first time \u2063over the entire postwar period the [Federal Open Market Committee] has made significant progress in lowering inflation without \u200can associated increase in the unemployment rate,&#8221; Richmond Fed staffers including senior adviser Pierre-Daniel Sarte wrote in the paper, published Wednesday on the bank&#8217;s website.<\/p>\n<p>&#8220;The current rate episode sees us in <span data-qa-component=\"highlight-text\">uncharted<\/span> waters,&#8221; with the Fed facing the largest-ever gap between inflation and \u2062the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/steve-forbes-reveals-the-key-tool-officials-are-not-wielding-against-inflation\/\" title=\"Steve Forbes Reveals The Key Tool Officials Are Not Wielding Against Inflation\">target federal funds rate<\/a> when officials \u2062started tightening monetary\u200c policy in March of 2022, and now seeing the unemployment rate remain stable and\u200d low despite the fastest increase in interest rates in at least 40 years, the researchers wrote.<\/p>\n<p>Whether that sort of cost-free decline in inflation can continue will be at the center of Fed discussion in coming weeks as policymakers\u200d decide whether they \u2063have moved interest rates high enough, or whether further rate hikes are needed.<\/p>\n<h3>Positive Trend Continues<\/h3>\n<p>New data released Thursday morning seemed to keep the\u200c positive trend intact.<\/p>\n<p>The Consumer Price Index rose at a 3.2 percent annual rate in July, \u2062which was a slight increase\u2062 over June&#8217;s 3 percent reading.<\/p>\n<p>But underlying \u200dprice trends showed\u200b continued slowing. Once stripped of volatile food and energy costs, the annual &#8220;core&#8221; CPI fell to 4.7 percent in July from 4.8 percent in June, and \u2062much of\u2062 that was driven by housing costs that \u200dFed officials feel are set to steadily \u2062moderate.<\/p>\n<p>Prices on a broad\u200d range of \u2063goods and services, from airline travel to medical\u2063 care, declined last \u2062month compared\u200d to the previous month.<\/p>\n<p>&#8220;Disinflationary pressures continued\u2062 to build,&#8221; Paul Ashworth, chief North America economist for Capital Economics, wrote in an analysis of the July CPI\u200b data.<\/p>\n<p>Excluding housing prices\u200c along with food and\u200d energy, something\u200b the Fed itself has been\u200d doing to gauge the breadth of inflation across parts of the economy where officials worried inflation was becoming more rooted, Ashworth calculated the CPI actually fell month to month, and on an annual\u200d basis increased just 2.5\u200c percent.<\/p>\n<p>&#8220;The Fed is close\u2064 to meeting its <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fed-dramatically-hikes-inflation-projection-in-much-awaited-meeting-will-not-taper-stimulus\/\" title=\"Fed Dramatically Hikes Inflation Projection In Much-Awaited Meeting, Will Not Taper Stimulus\">price stability goal<\/a>,&#8221; he said. Traders in\u200c contracts tied to the Fed&#8217;s policy interest rate pared \u200cbets that the central bank \u2062would raise rates again, giving only\u200d a one\u200c in four chance of another rate increase at any of the Fed&#8217;s three remaining meetings of 2023.<\/p>\n<p>Whatever the measure, the direction for the \u2063Fed so \u2062far has \u200cbeen a\u200d good one, with inflation as measured by the CPI down from a peak of 9.1 percent in \u200bJune of last year.<\/p>\n<p>The Fed has raised the federal funds rate 5.25 percentage points since March of last year, with policymakers approving rate increases at 11 of the last 12 meetings in a sequence of actions meant \u200bto discourage borrowing and \u2063spending, and\u200b slow both the economy and the pace of price increases.<\/p>\n<p>Typically, that would be associated\u2064 with a jump in unemployment as businesses \u200dand consumers scale back. Yet the unemployment rate has remained below 4 percent\u2014low for the United States\u2014since February of 2022, and stood at 3.5\u2064 percent as of last month.<\/p>\n<p>Fed policymakers have offered\u200d different interpretations of \u200dwhy that&#8217;s happening, from &#8220;labor hoarding&#8221; among\u200b firms scarred by how hard it was to\u200c hire during the pandemic, to inflation that may have been driven largely by problems in supply chains that have slowly corrected. Others feel the economy remains slow to adjust to higher\u2064 interest rates, and that the unemployment rate will ultimately rise before the\u200d Fed \u200bfinishes \u200dits inflation fight.<\/p>\n<p>How Fed officials analyze those\u200d sorts of nuances will determine whether \u2063they follow through with another \u2063rate increase at some point this \u2062year\u2014the majority view among policymakers as of their latest projections, issued in June &#8212; or decide that the current target interest rate range of between 5.25 percent and 5.5 percent is adequate.<\/p>\n<p>Policymakers have been reluctant to commit.\u200d The gap between the last Fed \u2062meeting in July and the \u200bnext one on Sept. 19-20 is an unusually long eight weeks, giving them \u2064two full months of data to consider.<\/p>\n<p>As of\u200b June, one\u2063 closely watched measure of prices, the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-economy-in-uncharted-waters-fed-staff-warn\/\" title=\"Fed staff warns that the US economy is in uncharted waters.\">personal consumption expenditures price index \u2062excluding food<\/a> and energy, \u2062was still running more than double the Fed&#8217;s 2 percent target. Only two Fed officials so \u200cfar have\u200c publicly said they feel rates do not need to go higher, with others saying they want the\u200d &#8220;totality&#8221; of the data \u200cin hand before making a decision.<\/p>\n<p>Given the unique circumstances,\u200c the Richmond Fed researchers noted risks on both sides.<\/p>\n<p>The current Fed &#8220;has been uniquely\u200d successful thus \u200dfar in lowering inflation\u200c while leaving the unemployment \u200brate at its lowest levels in roughly half a century,&#8221; they wrote, with the potential that policy tightening so far &#8220;may bring about further declines in inflation without a dramatic rise in the unemployment rate. This would be a first in the \u2063postwar U.S. economic experience.&#8221;<\/p>\n<p>Still,\u2063 &#8220;with little guidance from past rate cycles,\u2062 the FOMC will have to remain \u2064vigilant to avoid missing its target should the economy prove more resilient than anticipated.&#8221;<\/p>\n<p>(Reporting by \u2062Howard Schneider; Editing by Andrea Ricci and Christina Fincher)<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>of monetary policy is unprecedented,&#8221; stated the Richmond Fed staff. With inflation decreasing and no rise in unemployment, Federal Reserve officials face unfamiliar territory. They lack historical guidance, making their decision-making challenging. This unique rate cycle is unlike any other, leaving them in uncharted waters.<\/p>\n","protected":false},"author":66,"featured_media":1996477,"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":[544],"tags":[],"class_list":["post-1996476","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-free-beacon"],"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\/1996476","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=1996476"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1996476\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1996477"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1996476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1996476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1996476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}