Fed minutes show a majority of officials believe the pace of interest rate hikes will be slowed down soon. Irrespective, policymakers believe that rates will settle at levels “somewhat higher than they had previously expected.” According to Fed Chair Jerome Powell, interest rates need to rise higher than forecasts until they reach a “sufficiently restrictive” level.
On the other hand, new data shows signs of a cooling labor market and contracting business activities, pointing towards a weakening momentum for the economy. Moreover, Federal Reserve staff economists see a 50% chance of a recession next year amid slower consumer spending, global economic risks, and further interest-rate hikes.
