Search
 
News

Pit Stop or Peak?

Does a reduction in expected frequency of interest rate increases for 2019 mean we’re nearing the highest rates of this business cycle?

By Craig Torres & Alex Tanzi | January 22, 2019 at 03:18 PM

Deciphering the intentions of Federal Reserve officials rarely gets this easy. As one after another preaches patience before their next interest rate move, a tougher question is emerging about their plans to pause: Is this a pit stop or the peak?

After nine rate increases since December 2015, Fed officials have shifted from signaling “gradual” tightening to a stance that is “patient,” a word Chairman Jerome Powell used in comments on January 10 that has been repeated by several of his colleagues since. The chorus even extended to Kansas City Fed President Esther George, usually one of the most hawkish members and one who votes on monetary policy this year.

Anticipating a Fed on hold, financial markets are pricing in a high probability of no change at all in the policy rate for 2019. U.S. central bankers in December wrote down a median estimate of two more. Bridging this gap with investors is going to be tricky and potentially volatile if the Fed decides it needs to start raising rates again.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

Dig Deeper

 

Recommended Stories

Fed Reaffirms Inflation Resolve

Fed Reaffirms Inflation Resolve

Craig Torres |

Minutes from the FOMC’s December meeting include an unusually blunt warning to investors, cautioning against underestimating the Fed’s will to keep interest rates high for some time.

Analyst Who Exposed LIBOR Is Now Targeting SOFR

William Shaw & Alexandra Harris |

Large Wall Street dealers already stand to lose $5 million to $10 million if the spread between overnight and term SOFR moves against them by just 1 basis point, and their exposure grows with every new transaction.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2023 ALM Global, LLC. All Rights Reserved.