The Fed hiked rates by 50 basis points last month and Fed officials agreed a slower pace of interest rate increases would allow them to continue increasing the cost of credit to control inflation in a gradual way meant to limit the risks to economic growth.
The Fed’s hawkish outlook was captured by the revision higher in the median rate expectation for 2023 at December’s meeting and “was well reflected in the press conference and the forecasts and the statement at the time.”Fed fund futures traders are pricing in a 67% likelihood that the US central bank will continue to slow the pace of its rate hikes in February to 25 basis points.
December’s employment report due on Friday is this week’s major US economic focus and is expected to show that employers added 200 000 jobs in the month, while average hourly earnings are predicted to have risen 0.4% in December for an annual increase of 5%. Optimism for further stimulus in China as it reopens from COVID-19 shutdowns boosted risk sentiment earlier on Wednesday, reducing demand for the US dollar.
Notule can only be obtained by those sitting in the meeting.