Fed Governor Waller sees December hike likely, opens door to possible half-point increase
The policymaker said he "is leaning toward" a rate increase in December and could support a half-point hike depending on inflation data.
Federal Reserve Governor Christopher Waller's comments suggest that a December rate hike is increasingly likely, with the possibility of a larger half-point increase still on the table. This development has implications for fund managers, who will need to consider the potential impact on their portfolios. A rate hike, particularly one of half a percentage point, could lead to increased borrowing costs and affect the attractiveness of various asset classes.
Waller's stance is consistent with the Fed's recent messaging, which has emphasized the need to combat inflation. The central bank has been raising interest rates to slow down the economy and bring inflation back under control. Fund managers should be prepared for further rate hikes in 2023 and consider how their investments will perform in a higher-interest-rate environment. The upcoming release of inflation data will be closely watched, as it will inform the Fed's decision on the size of the potential rate hike.
Looking ahead, fund managers should watch for the Fed's December meeting and the accompanying economic projections. The market is currently pricing in a high probability of a rate hike, but the size of the increase remains uncertain. Additionally, investors will be monitoring inflation data, such as the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) price index, for signs of whether the Fed's efforts to combat inflation are having an impact.
Originally reported by cnbc.com. FundNews adds analysis for finance & markets readers.