Tag: Federal Open Market Committee

U.S. Economic Growth Beats Expectations in Second Quarter

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The U.S. economy grew at a rate of 2.8 percent in the second quarter of 2024, according to gross domestic product (GDP) statistics released by the Bureau of Economic Analysis (BEA) on Thursday.

Higher growth in the second quarter follows poor growth in the first quarter of 2024, which measured 1.4 percent after being revised down from an initial estimate of 1.6 percent, according to the BEA. Economists expected that GDP would increase by around 2.1 percent in the second quarter of 2024, in line with typical U.S economic growth rates.

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Atlanta Fed’s Bostic ‘Optimistic’ Economy Headed ‘In the Right Direction’

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Raphael Bostic

The head of the Federal Reserve Bank of Atlanta remains “quite optimistic that things are heading in the right direction.”

In a video message posted Thursday alongside a longer-form piece, Raphael Bostic, president and chief executive of the Federal Reserve Bank of Atlanta, said that after the inflation rate declined rapidly in the second half of 2023, it seemed to stall early this year.

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More Investors Bet Inflation Is Here to Stay amid Disappointing Price Data

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More investors are projecting a “no landing” scenario where inflation remains elevated but economic growth continues at its current levels following a disappointing inflation report on Tuesday, according to Reuters.

Nearly one out of five fund managers polled by Bank of America predicted a “no landing” scenario as the most likely outcome in the next year, with concerns about such a scenario being intensified by a poor inflation reading that sent U.S. markets into a frenzy on Tuesday, according to Reuters. Tuesday’s consumer price index (CPI) report showed inflation decelerated in January to 3.1% year-over-year from 3.4% in the preceding month, higher than expectations of 2.9%.

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Investors Say They are Betting Inflation Is Here to Stay

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Investors bet on the U.S. entering an era of sustained high inflation as Treasury yields spike, according to Reuters.

The bond market has seen a surge in interest rates for 10-year Treasury yields, reaching 4.59 percent, the highest point since September 2007 before the country was sent into a recession just months later, according to the Federal Reserve Bank of St. Louis. The state of the bond market indicates that investors believe that the age of low inflation and interest rates is over as the country enters a “high-pressure equilibrium,” driving inflation higher than what was previously considered normal, according to Reuters.

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Atlanta’s Fed Chief Raphael Bostic: ‘Pandemic-Related Effects on the Economy Have Not Fully Unwound’

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The head of the Federal Reserve Bank of Atlanta says the cumulative effects of monetary policy adjustments are showing signs of working.

The Federal Open Market Committee recently voted to maintain the 5 percent to 5.25 percent federal funds rate. While the FOMC’s Summary of Economic Projections “are not true forecasts in the statistical sense” or “commitments to follow a particular course of action,” financial market watchers view these projections as indicators of economic conditions, Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta, said.

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Fed Hike Rates .025 Percent as Inflation Fears Loom

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The Federal Reserve on Wednesday raised interest rates by 25 basis points, issuing an 0.25 percent hike in line with earlier expectations in a move that signals a rate slowdown in the Fed’s fight against inflation. The Fed said in a statement that its Federal Open Market Committee “anticipates that ongoing increases in the target range” will still be necessary “in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time,” a sign that the central bank will be looking to more rate hikes in the near future.

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Federal Reserve Indicates Interest Rate Hike Arriving in March

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With both volatile markets and significant inflation in the mix, the Federal Reserve on Wednesday indicated that it may soon raise interest rates for the first time in more than three years.

“With inflation well above 2 percent and a strong labor market, the committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the body said n a highly anticipated statement following its meeting.

The Federal Open Market Committee added that the central bank’s monthly bond-buying will proceed at just $30 billion in February, signaling that the program could come to an end in March as the interest rate increases.

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