Expect longer, but smaller rate hikes from the Fed: Quincy Krosby
LPL Financial chief global strategist Quincy Krosby reacts to the market’s best day in two years after a cooler-than-expected October inflation report.
Federal Reserve officials agreed at their November meeting that smaller interest rate hikes are appropriate in coming months as they weigh the impact that tighter policy is having on the broader U.S. economy.
Minutes from the U.S. central bank's Nov. 1-2 meeting released on Wednesday showed that policymakers anticipate downshifting the pace of rate increases soon, even though they see little signs of inflation abating. However, some committee members expressed concern about possible risks to the economy from higher rates and suggested a slower pace could allow them to assess progress on their goals. Others said they would like to wait before easing up on the pace of increases.
"A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate," the minutes said ."The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important."
Traders now expect the Fed to approve a 50 basis point rate increase in December, following four consecutive 75 basis point increases in June, July, September and November.