Wall Streettraders were optimistic the US Federal Reserve has conducted its final interest rate hike before they can come down again, as it raised rates by another quarter-point today.
The Fed paused its hikes at its last meeting in June, but markets believed another rise was still on the cards, even as hopes of a “soft landing” from inflation continued to grow. The inflation rate in the US is just 3.0%, close to the Fed’s 2% target. However, core inflation - which strips out food and energy to create a more reliable tracker for where prices might go next - is higher at 4.8%, as much of the decline has been due to energy and fuel prices returning to close to normal levels.As a result, the Fed raised rates again today, as was widely expected.The Fed said: “Recent indicators suggest that economic activity has been expanding at a moderate pace. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated.”But with the rises having a delayed effect on prices, it is hoped that another will not be needed.If so, that will increase hopes that the US will perform a rare “soft landing”, by managing to bring inflation down from a peak of 9.1% without forcing a major economic slowdown.
