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Will the Fed stay patient on deciding what to do about interest rates?
The Federal Open Market Committee’s regularly scheduled meeting starts tomorrow, and everyone is wondering what the Fed will signal about its policy on interest rates. Julia Coronado, founder and president of MacroPolicy Perspectives, lays out a couple of a scenarios for what Chair Jerome Powell might say in his Wednesday press conference. “There certainly are a lot of people that expect them to show a rate hike in 2023,” Coronados said. “Now that’s not soon, but that is earlier than they were signaling before, and that is in response to inflation that’s been a lot higher than they expected. Now, the other alternative scenario would be that they confirm that they expect this inflation to be transitory and confirm the same policy patience that they showed last meeting.” Coronado said she errs on the side of the Fed keeping to its previous messaging — that they will “ride through this reopening phase of the economy before deciding what to do with policy.”