The middle point of a busy two weeks is being occupied by a two-day meeting of the Federal Reserve’s Open Market Committee. At this juncture, the bets are on another .25% increase in short-term interest rates, but there is some hope that the Fed finally passes on increases for the first time in ten meetings. Cumulatively, the Fed has raised short-term rates 4.75%, which is significant, but one must remember that short-term rates were brought down close to zero during the pandemic.
Meanwhile, the Fed has plenty of data to work with in making their decision. Most recently, the first measure of economic growth (GDP) for the first quarter was released. The 1.1% growth rate was seen as weaker than expected. Plus, last week we saw the data on personal spending, which came in flat as expected after a strong start to the year. Accompanying this report was the Personal Consumption Expenditures Price Index (PCE Price Index), which continued to moderate from last year’s torrid pace. This is a number is one the Fed watches closely, along with the Consumer and Producer Price Indices released earlier last month.