Federal Reserve prepares for another rate adjustment

The Federal Reserve meets tomorrow and Wednesday where the market expects it to raise its interest rates again in the face of inflation that remains high in the United States, despite the growing risks of recession in an economy that already shows signs of cooling.

Prices that continue to rise, consumption that remains, a job market that remains tense:

“We are almost certain that the FOMC will raise rates by 75 basis points in November,” said Jonathan Millar, Chun Yao and Colin Johanson, economists at Barclays.

A vast majority of market players are betting on a rate hike of that magnitude and the rest expect half a percentage point, according to CME Group.

And then? Will rates continue to rise in December, at the risk of affecting consumption too much?

“The big question is whether this week’s FOMC statement or press conference will give any clues about the likely path of monetary policy in December,” the Barclays economists noted.

According to them, the discussion will turn to the risk of excessive adjustment.

Fed stands to lose millions from fighting inflation

The central bank’s aggressive campaign to rein in inflation has it forecasting tens of billions of losses in coming years, experts said.

“The deferred asset account is likely to top out at $100 billion to $200 billion, and it’s likely to take three to four years to recover,” said Derek Tang of LH Meyer Monetary Policy Analytics.

Those losses won’t impede your ability to conduct monetary policy, but over time they may expose you to friction on the political front.