Biden Appoints New Fed Vice Chair As Fedwatch Tool Shows Little Chance Of Rate Hike At June Meeting – Economics Bitcoin News
Investors believe it is highly likely that the target interest rate will remain unchanged at the Federal Open Market Committee (FOMC) meeting on June 14, following the US Federal Reserve’s decision to raise the federal funds rate by 25 basis points on May 3. As the fight against inflation in the United States rages on, the Biden administration appointed Philip Jefferson as the new deputy chairman to replace Lael Brainard. The US president stated that his nominee will play a “crucial role” in maintaining price stability and overseeing the nation’s financial institutions.
The Fedwatch tool points to a low chance of an interest rate increase
Just over a week ago, on May 3, 2023, the US central bank raised the federal funds rate to 5.25% after a quarter-point interest rate increase. Fed Chairman Jerome Powell was quick to emphasize that inflation remained a major concern and that the FOMC was committed to bringing the inflation rate back to the 2% target. However, the latest Consumer Price Index (CPI) report, released on May 10, revealed that over the past 12 months, “the index for all goods increased by 4.9%.”
Last Friday was a tough day for the stock market, with the S&P 500, Dow Jones Industrial Average, Nasdaq Composite and Russell 2000 Index all closing in the red. The crypto economy has also experienced a downward trend, while precious metals such as gold and silver have traded sideways.
The next FOMC meeting looks set to be a nail-biter, with the latest data from the CME Fedwatch tool indicating an 84.5% chance that interest rates will remain unchanged. However, there is also a slight chance of a rate hike of 5.50 percent, with the Fedwatch tool showing a probability of about 15.5 percent.
Biden’s new Fed deputy chair meets high expectations
Forbes journalist Simon Moore reports that most policymakers prefer to keep interest rates at current levels, according to the latest data from March. However, Moore says a few believe rates should be closer to 6%, and one participant predicts rates won’t stay at current levels by the end of the year.
According to the reporter, the question for every market investor is whether the central bank will fluctuate this year or not. In addition to expectations regarding the next FOMC meeting, President Joe Biden has also made some major changes to the Fed’s leadership.
With fresh blood at the helm, many wonder how this will affect the central bank’s policy and priorities going forward. Powell will now have a new second-in-command as President Biden appointed Philip Jefferson as his new deputy. Biden stated that Jefferson was confirmed by the Senate by a strongly bipartisan vote of 91-7 and stressed that he looks forward to his “swift confirmation” as vice president.
Reports suggest that Jefferson is aligned with Powell’s efforts to curb inflation and is unlikely to push back against the Fed’s current policy.
What do you think the appointment of Philip Jefferson as the new vice chairman of the Fed means for the future of central bank policy? Share your thoughts on this topic in the comments section below.
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