The Fed is expected to announce a fourth straight rate hike by three-quarters of a percentage point on Wednesday afternoon. But investors are hopeful that Fed Chairman Jerome Powell will signal that the central bank will soon “turn around” and slow the pace of rate hikes.
Those dreams may be dashed.
“I don’t believe Powell will back down,” he said Danielle DiMartino Booth, CEO and Chief Strategist, Quill Intelligence CNN’s Alison Kosik on Wednesday’s “Markets Now.” “It is his responsibility to follow through.”
DiMartino Booth, who has worked at the Dallas Fed for nine years, said she thinks the Fed will continue to focus more on fighting inflation, especially if the job market remains healthy.
Fed will be wary of soaring consumer prices, Rick Rieder, Chief Investment Officer, Global Fixed Income, BlackRock, agree
“One pivot could be aggressive. We still have high inflation and still solid employment,” Rieder told Kosik.
But Reid said it could be the last rate hike of this magnitude. That’s because previous rate hikes have already had an impact on parts of the economy: “You’ll see it in real estate, and soon in autos and other interest-rate-sensitive industries.”
DiMartino Booth is more concerned about the impact of rate hikes.
“The Fed will definitely have an impact on consumption,” she said, adding that “a recession is almost a foregone conclusion.”
To make matters worse, she said, “we may be trying to get out of this unusually huge for a long time. [rate] travel by walking. ”