Many hope that any recession will be easy, but now is an unprecedented situation for the Fed. Former central bank presidents Alan Greenspan, Ben Bernanke and incumbent Finance Minister quan quan Yellen have never had to raise interest rates so many times in a row on such a large scale.
On the side of lawmakers on Capitol Hill, many are warning Fed Chairman Jerome Powell and other Fed members to slow down the pace of interest rate increases. They fear that further tightening monetary policy will push the US to the brink of recession.
It is not yet clear what this interest rate race will bring to the economy, but the US real estate market has shown signs of tension. Bond yields increased dramatically. mortgage rates tend to shift progressfully in parallel with the 10-year Treasury rate.
But as long as the job market remains strong, the Fed can continue to focus on price stabilization and ignore all things related to maximum employment.
Mr. Steve Wyett, investment strategist at BOK Financial, said: The Fed has a lot of work to do. The inflationary pressures will take longer to handle."
The improvement of gross domestic product (GDP) in the third quarter of 2022 after two consecutive quarters of recession may also have somewhat eased some, but not all concerns about recession. That could also prompt the Fed to continue raising interest rates, regardless of the consequences.
Experts say the worrying thing is that the Fed can focus on current economic data and not fully anticipate the delay of interest rate increases.
The Fed's policy meeting comes just two days before the labor market report is due. According to Reuters, experts predict that 200,000 jobs were added in October, down from 263,000 in September. The unemployment rate fell to 3.5% in September and is expected to rise to 3.6% in October.
In the September employment report, the Government said that average hourly earnings have increased by 5% in the past 12 months. The Fed often prefers to see wage growth in the range of 2 - 3%/year as a sign that inflation is under control.
Before the Fed's next policy meeting on December 13-14, there are 2 more employment reports and 2 more consumer price indices (CPIs). If Mr. Powell had signaled a slowdown after this meeting, he might have had to withdraw that signal before the December meeting.
