The US Central Bank is heading to raise interest rates again at its next meeting
New York, USA (CNN)–The US Federal Reserve (the us central bank) is likely to raise interest rates by three-quarters of a percentage point again, on Wednesday, in the fourth major increase in a row. Another increase of this size is still possible in December.
But the big question for many American investors, and consumers, is whether the Federal Reserve will send the economy into a recession with these massive interest rate increases.
There are hopes for any moderate pullback, but this is uncharted territory for the Fed. Previous central bank chiefs Alan Greenspan, Ben Bernanke and current Treasury Secretary Janet Yellen did not have to raise interest rates so many times in a row.
It is unclear what all this tightening will do to the economy. The housing market is already starting to show some signs of stress. Bond yields rose due to the Fed. As a result, mortgage rates have gone up quite a bit this year.
There is also a growing group of Democratic lawmakers who are warning Fed Chair Jerome Powell and other Fed members and calling for a slowdown in rate hikes because they fear tighter monetary policy could lead to a recession.
But as long as the job market remains in good shape, the Fed will likely continue to focus solely on its price stability mandate and ignore all that stuff about maximum employment.
A strong recovery in gross domestic product, or gross domestic product, in the third quarter after two consecutive quarters of economic contraction may allay some, but not all, recession fears. It may also push the Fed to continue its interest rate hike stance, even if the policy risks causing a recession in the future.
The Fed meeting takes place just two days before the next labor market report is released. Economists expect a slowdown in job growth, but not a significant slowdown.
According to a Reuters estimate, experts expect 200,000 jobs to be added in October, down from 263,000 new jobs in September.
The unemployment rate, which fell to 3.5% in September, is expected to rise to 3.6% this month. But this is still near the lowest level in half a century.