Federal Reserve’s Interest Rate Outlook
According to Steve Forbes, the chairman of Forbes Media, the Federal Reserve is unlikely to raise interest rates in the coming months. He believes that the Fed will take a pause due to conflicting economic data in the United States. While some indicators show weakness, such as the labor market, others, like the services sector, are performing well. This mixed picture gives the Fed an excuse to maintain the status quo and refrain from making any changes.
The next meeting of the Federal Open Market Committee is scheduled for September 19 to 20. Currently, there is a 92% chance that the central bank will leave rates unchanged after this meeting, as indicated by the CME’s FedWatch tool. However, the probability of a rate hike increases to 38.4% after the November meeting.
This cautious approach by the Fed follows its aggressive rate hike campaign that began in March 2022 in response to rising inflation, which reached its highest levels in 40 years.
Potential Government Shutdown and Elections
Steve Forbes also expressed his concerns about a potential government shutdown in the United States. Funding for the federal government is set to expire at the end of the month unless Congress takes action. If spending legislation is not passed, a government shutdown will occur on September 30.
Forbes predicts that Washington will wait until the last minute to reach a deal, which increases the risk of slipping into a government shutdown. He also anticipates that the 2024 elections will focus on economic issues, with the state of the economy being the top concern. Other topics that will play a role include crime, foreign policy, and Washington’s stance on the global stage as well as its approach towards Ukraine.
