[Asia Economy New York=Special Correspondent Joselgina] Lael Brainard, Vice Chair of the U.S. Federal Reserve (Fed), expressed on the 14th (local time) that the Fed may soon slow down the pace of rate hikes, emphasizing the possibility of a big step (0.5 percentage point increase in the benchmark interest rate) in December.
In an interview with Bloomberg, Vice Chair Brainard confirmed, "I think it will soon be appropriate to slow the pace of rate hikes."
Vice Chair Brainard explained, "We have done a lot, but there is still additional work to be done both in continuing rate hikes and restraint to bring inflation down to the 2% target." This message indicates that contrary to market expectations, the Fed's rate hikes are not yet over.
Previously, with the Fed's four consecutive giant steps (0.75 percentage point rate hikes), the U.S. benchmark interest rate has risen to 3.75?4.0%.
The market widely expects that at the FOMC scheduled for December 13?14, the Fed will slow the pace of rate hikes by raising rates by 0.5 percentage points instead of 0.75 percentage points. This is a forecast that the Fed, wary of unnecessary economic recession due to excessive tightening, will now take its foot off the accelerator of tightening.
The previously released October Consumer Price Index (CPI) also supports the view that U.S. inflation has begun to ease, slowing to the 7% range. Vice Chair Brainard also evaluated the October CPI data as showing signs that inflation is cooling.
According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) rate market currently reflects more than an 80% chance of a big step by the Fed in December. This figure has risen from 52% on the 7th, before the CPI release. Meanwhile, the giant step outlook has dropped from 48% a week ago to 19.4% on this day.
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