The Federal Reserve will probably hike interest rates once again during its final meeting of 2022. And Bloomberg reports the Fed is likely to maintain high interest rates through 2023, according to several economists surveyed. So after four consecutive 75-point hikes and another 50-point hike likely on the way, is high interest here to stay? Unfortunately, the Fed rate hike news shows we’ll have to deal with it for a while.
Continued Fed rate hikes could lead the US into a recession.
Following expectations, the Fed will raise interest rates to 4.75%-5% during the December 13-14 meeting. And according to economists surveyed by Bloomberg, they will likely maintain high interest rates through 2023. Additionally, 81% of economic experts surveyed said a recession is likely. Only 2% said the United States central bank could achieve a soft landing, avoiding severe economic impact. And 16% expect a hard landing, meaning some financial pain but not quite a recession.
Several signs point to conditions slowly easing.
An analysis by Reuters shows that economic conditions are easing. Additionally, in contrast to Bloomberg, the Fed may end rate hikes sooner rather than later. Mortgage rates are falling, the market is poised to bounce back, and corporate debt has dropped.
“I would expect [Fed chairman Jerome Powell] to reiterate that they’re going to keep policy restrictive for some time,” said economist Sonia Meskin. “[B]ut I don’t think he likely to say anything beyond that […] they actually want to keep their options open.”
According to CNN, economist Kathy Jones said the Fed is “making it up as they go along,” agreeing with Meskin. However, she also reiterated that continued rate hikes would severely damage the job market, which has remained strong despite fears of recession.
Can the job market hold strong?
Despite impending rate hikes, Reuters reports the global economy is holding firm ahead of the Fed’s upcoming meeting. “The key about recession is generally employment, said Baird investments vice chair of equities Patrick Spencer. “[A]nd I think employment is going to be stronger than people give it credit.”