As with its previous rate hikes, Wednesday’s increase would likely further elevate the costs of mortgages, auto loans, credit cards and business borrowing
Another hike is widely expected despite a run of encouraging news that has sent stock prices steadily higher, boosted consumer confidence and brightened hopes that the Fed can pull off a difficult “soft landing,” in which inflation would continue to slow toward the Fed’s 2 per cent target without sending the economy tumbling into a recession.
In June, the policy-makers signalled that they expected to impose two more increases, including Wednesday’s expected hike. Some economists have said they worry that too many hikes could trigger a painful recession. And in late August, Powell will speak at the annual gathering of central bankers in Jackson Hole, Wyoming, which is typically a high-profile opportunity to signal shifts in Fed policy or strategy.
Yet by then, most economists think inflation – and the economy – will have cooled enough that another hike won’t be needed. If so, Wednesday’s rate increase would end up being the final one this year.
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