abrdn: Fed will warn about rate hike

abrdn: Fed will warn about rate hike

October 27, 2023

Interest Rates Fed
Fed dollar (kreatikar, Pixabay)

James McCann, Deputy Chief Economist at abrdn, looks ahead to next week's Fed meeting:

'The Fed is set to hold rates unchanged at its meeting next week. Based solely on economic activity, there would be a strong case for an interest rate hike, against the backdrop of blockbuster Q3 GDP growth, brisk payroll gains and firmer inflation over September.

However, rising market interest rates and struggling risk assets push in the other direction, with these headwinds expected to weigh on growth and inflation moving forward. Indeed, a host of FOMC members have flagged that this adjustment has already delivered an effective tightening in policy settings.

Despite these concerns, the Fed will not be calling it quits at this meeting and is likely to continue to signal that rates may need to rise further. Certainly, it will be concerned that current run rates of growth will make it harder to drag inflation back to target, and if there are no signs of slowing by December a hike will come back onto the table.'

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