Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Former Fed Vice Chairman Roger Ferguson Thinks The Markets Have It Wrong And Rate Hikes Will Continue Into 2023

Stock Markets Oct 24, 2022 18:40
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Former Fed Vice Chairman Roger Ferguson Thinks The Markets Have It Wrong And Rate Hikes Will Continue Into 2023
 
FERG
-0.12%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Roger Ferguson, former vice chairman of the Federal Reserve and former CEO of TIAA, joined CNBC’s ‘Squawk Box’ earlier Monday morning to discuss what he expects to come from the Fed.

What Happened: As the markets began to rally last week into Friday, based on the potential that the Fed may pivot in December, Ferguson said that he expects the Fed to raise interest rates by the benchmark of 75 basis points at the Nov. 2 Fed meeting.

Although depending on the data, Ferguson is expecting a 50 bps to 75 bps hike in the last Fed meeting of 2022, which falls on Dec. 14.

Furthermore, Ferguson thinks the rate hikes will continue into 2023, forecasting one or two more rate hikes at the beginning of next year.

Also Read: It's A Bird, No A Plane, It's... A Side-Scraper? Saudis Break Ground On Desert Metropolis

Why It Matters: Ferguson mentioned that “the market was wrong to get off to the races,” as the Fed will keep interest rates elevated once it is done hiking to stabilize and bring down inflation.

Pointing back to the summer rally, Ferguson reported that the market has had bouts of “hopeful and optimistic behaviors,” as there was talk of peak inflation and the Fed pivoting. Except investors are missing out on the big picture, which is that inflation is much higher than the Fed is comfortable with, Ferguson said.

This is why Fed officials will use their tools to bring inflation to a 2% target, and keep interest rates elevated until there are true signs it has stabilized, before pivoting their stance on interest rates.

The Fed will also be closely watching the equity markets. When the markets rally, it shows that “monetary policy is not being transmitted as much as the Fed would like,” the former vice chairman said.

The Last Word: The Fed was most likely not pleased with the rally last Friday, as Ferguson believes that the markets may not clearly understand that the Fed will use its tools until inflation declines, or they are misinterpreting the slowing of rate hikes as a “change of intention.”

Ferguson also added that if he was at the Fed, “I would be scratching my head a little bit, as to why it is so hard to keep equity markets understanding the intentions,” which could lead to a tighter monetary policy or more hawkish rhetoric in future meetings.

Photo: Courtesy of Gerald R. Ford School of Pu on flickr

© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga

Former Fed Vice Chairman Roger Ferguson Thinks The Markets Have It Wrong And Rate Hikes Will Continue Into 2023
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email