Skip to main content
PGIM LogoPGIM Logo
stock market
Article

Fed Sees Fewer Rate Cuts on the Horizon FedSeesFewerRateCutsontheHorizon

Sep 21, 2023

Share
  • Mail
  • LinkedIn
  • Twitter
  • Copy URL
  • Print

Share

The Federal Reserve followed through on an expected September pause on Wednesday but signaled that interest rates will stay higher for longer, maintaining a hawkish posture against inflation amid durable consumer spending and stronger-than-expected economic growth. In an updated set of economic projections, the Fed continued to suggest that it will raise rates by another 25 basis points by year’s end, while it penciled in fewer rate cuts over the next two years compared with forecasts published in June. The Fed’s outlook shows that policymakers expect to keep policy tight for an extended period after seeing how the economy has tolerated higher levels of interest rates and inflation. This further illustrates that investors are facing a far different environment than the so-called Great Moderation that defined the recovery from the 2008 financial crisis.

The Fed and other central banks are weighing exactly how high rates need to rise, and for how long, to quell inflation without triggering a sharp economic downturn. UK inflation bucked forecasts by cooling in August, prompting the Bank of England to forgo a rate hike on Thursday. In the US, the run-up in Treasury yields of late—and the corresponding increase in real rates—may have the effect of constricting growth through tighter borrowing conditions. A slowdown in hiring, a strike by auto workers, the resumption of student loan payments, and a potential government shutdown also contribute to uncertainty surrounding the outlook, giving the Fed room to take a more methodical approach to setting rates. Meanwhile, a recent surge in oil prices threatens to curb growth while driving up prices for other goods and services, a reminder that new inflation risks may still emerge. In a new post on The Bond Blog, PGIM Fixed Income explains that while higher rates are still possible, yield levels are back to historically attractive levels that point to productive conditions ahead.

Read more
Learn More
Markets in Motion

Timely insights from across PGIM

Learn More

You may also like

Inflation Heats Up as Fed Decision Looms
Article

Inflation Heats Up as Fed Decision Looms

Sep 13, 2023

Higher energy prices provided the fuel for a hotter-than-expected report on US consumer inflation.

US, China Flash Warning Signs for Global Economy
Article

US, China Flash Warning Signs for Global Economy

Sep 7, 2023

Mounting US consumer stress and China's tepid recovery raise potential downside risks for the economy and financial markets.

Markets Await Jobs Data After Powell’s Hawkish Pitch
Article

Markets Await Jobs Data After Powell’s Hawkish Pitch

Aug 30, 2023

The August jobs report will arrive on Friday with the Federal Reserve’s inflation fight entering its next round.

PGIM Logo
  • Terms & Conditions
  • Privacy Center
  • Accessibility Help
  • UK Regulatory Disclosures
  • Netherlands Regulatory Disclosures
  • Canadian Regulatory Disclosures
  • Ireland Gender Pay Gap Report
  • Cookie Preference Center

For Professional Investors only.* All investments involve risk, including the possible loss of capital.

This material is for informational and educational purposes only and should not be construed as investment advice or an offer or solicitation in respect of any products or services to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. PGIM is the principal asset management business of Prudential Financial, Inc. and a trading name of PGIM, Inc. and its global subsidiaries. PGIM, Inc. is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply a certain level of skill or training.

The information on this website is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. In making the information available on this website, PGIM, Inc. and its affiliates are not acting as your fiduciary.    

In the United Kingdom, this website may be issued by PGIM Private Alternatives (UK) Limited or PGIM Private Capital Limited.  In the European Economic Area (“EEA”), this website may be issued by PGIM Private Capital (Ireland) Limited or PGIM Luxembourg S.A. or PGIM Real Estate Germany AG.

PGIM, Inc. has its headquarters at 655 Broad Street, Newark, NJ 07102. PGIM Private Capital (Ireland) Limited has its registered office at IDA Business Park, Letterkenny, Co. Donegal, F92 FP83, Ireland. PGIM Private Capital (Ireland) Limited is authorised and regulated by the Central Bank of Ireland and registered in Ireland under company number 635793 operating on the basis of a European passport. PGIM Limited and PGIM Private Alternatives (UK) Limited have their registered offices at Grand Buildings, 1-3 Strand, Trafalgar Square, London WC2N 5HR. PGIM Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number: 193418). PGIM Private Alternatives (UK) Limited is authorised and regulated by the FCA of the United Kingdom (Firm Reference Number: 181389). PGIM Private Capital Limited has its registered address at 1 London Bridge, London SE1 9BG and is authorised and regulated by the FCA of the United Kingdom (Firm Reference Number: 172071). PGIM Luxembourg S.A., Netherlands Branch is registered with the Netherlands Chamber of Commerce under number 85998877 and has its local offices at Gustav Mahlerlaan 1212, 1088LA Amsterdam, The Netherlands. PGIM Luxembourg S.A. has its registered address at 2 Boulevard de la Foire, L-1528 Luxembourg and is authorised and regulated by the Commission de Surveillance du Secteur Financier (“CSSF”) in Luxembourg (registration number A00001218). PGIM Real Estate Germany AG has its registered address at Wittelsbacher Platz 1, 80333 Munchen, Germany and is authorised and regulated by Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”) in Germany (registration number 10138142).

In Japan, information is provided by PGIM Japan Co., Ltd. (“PGIM Japan”) and/or PGIM Real Estate (Japan) Ltd. (“PGIMREJ”).  PGIM Japan, a registered Financial Instruments Business Operator with the Financial Services Agency of Japan offers various investment management services in Japan.  PGIMREJ is a Japanese real estate asset manager that is registered with the Kanto Local Finance Bureau of Japan.

In Hong Kong, information is provided by PGIM (Hong Kong) Limited, a regulated entity with the Securities & Futures Commission in Hong Kong to professional investors as defined in Section 1 of Part 1 of Schedule 1 of the Securities and Futures Ordinance (Cap. 571). In Singapore, information is issued by PGIM (Singapore) Pte. Ltd. (“PGIM Singapore”), a regulated entity with the Monetary Authority of Singapore under a Capital Markets Services License to conduct fund management and an exempt financial adviser. This material is issued by PGIM Singapore for the general information of “institutional investors” pursuant to Section 304 of the Securities and Futures Act 2001 of Singapore (the “SFA”) and “accredited investors” and other relevant persons in accordance with the conditions specified in Section 305 of the SFA. In South Korea, information is issued by PGIM, Inc., which is licensed to provide discretionary investment management services directly to South Korean qualified institutional investors on a cross-border basis.   

Prudential Financial, Inc. (“PFI”) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. 

*PGIM.com/Podcasts and its content is intended for informational or educational purposes only and is not directed exclusively to Professional Investors. 

You are viewing this page in preview mode.

Edit Page