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Fed's next move could create market ‘volatility, uncertainty,' ex-Kansas City Fed president warns
Fed should be ‘very careful’ to ‘not signal’ a future move that could create market ‘volatility’: Thomas Hoenig
Former Kansas City Federal Reserve President and CEO Thomas Hoenig on the Fed’s November meeting and how the bank will address inflation and interest rates.
What kind of rate hike is the Fed planning for after November’s meeting? Former Kansas City Federal Reserve president and CEO Thomas Hoenig believes no one knows, and any signs given at Wednesday’s meeting could mean "more volatility" and "uncertainty" in the market.
"I don't think the Fed has an endpoint in mind because they don't know where inflation is going from here," Hoenig said in an interview on "Mornings with Maria" Tuesday. "They're hoping that it will moderate, but they don't know that. So they'll be, I hope, very careful in what they say at tomorrow's press conference and not signal any kind of future move. Now, that means there'll be more volatility because it will create uncertainty."
Federal Reserve officials are expected to maintain their hawkish stance at tomorrow’s policy-setting meeting where they are likely to approve another super-sized interest rate hike, paving the way for borrowing costs to climb above 5% by March 2023, according to a survey of Bloomberg economists.
Hoenig told host Maria Baritromo he’s also expecting a 75-basis point hike and that expectation is pretty "baked in the cake," but warned December’s rate hike will come with more "issues."
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The U.S. central bank is predicted to approve a 50-basis point increase in December, followed by 25-basis point increases at the following two meetings in February and March, Bloomberg participants had reported. The rapid tightening of policy is likely to trigger a U.S. and global recession, according to the survey.