Federal Reserve pauses rate hikes as inflation slows down
NBCOct 01, 2023
The Facts
Following 11 rate hikes in 18 months, the US Federal Reserve (Fed) chose on Wednesday to leave benchmark interest rates unchanged between 5.25%-5.5% in the bid to tackle inflation.
The decision is the result of a two-day policy meeting, with Fed Chair Jerome Powell forecasting that a restrictive monetary policy was likely set to last until 2026.
The Spin
Pro-establishment narrative
Signals of a potential soft landing by the Fed are becoming ever clearer, and a cooling labor market is a positive sign that the US economy is moving in the right direction. However, with inflation still nowhere near the desired 2% mark and multiple potential hiccups looming, there's more to do before consumers can finally breathe a sigh of relief, which is why the Fed is right to stay its course.
Establishment-critical narrative
By doubling down on high interest rates for longer, the Fed is risking a financial crisis and economic recession in 2024. With approximately $24.5B of the $1.5T loan market already defaulting – with 2023 expected to be the third worst defaulting year in US history – it is hard to see how a further collapse will be avoided and debts repaid in the current economic environment.
