Auto Finance News
  • Home
  • News
  • Features
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Webinar
    • Harnessing AI & Machine Learning to Address Vehicle Affordability Issues
    • Webinar Library
  • Podcast
  • Powersports
  • Big Wheels Data

No products in the cart.

Subscribe
  • Capital & Funding
  • Compliance
  • Risk
  • Technology
  • Best Practices
  • Compliance Monitor
Log In
No Result
View All Result
Auto Finance News
  • Home
  • News
  • Features
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Webinar
    • Harnessing AI & Machine Learning to Address Vehicle Affordability Issues
    • Webinar Library
  • Podcast
  • Powersports
  • Big Wheels Data
BIG Wheels
Log In
No Result
View All Result
Auto Finance News
No Result
View All Result

Fed mulls ‘game changer’ to jolt inflation: Decision day guide

Bloomberg NewsbyBloomberg News
June 14, 2022
in Risk Management
Reading Time: 5 mins read
0

Federal Reserve Chair Jerome Powell, who’s carefully telegraphed interest rate hikes over four years, looks likely to abandon gradualism and move more forcefully to stamp out inflation along with growing concerns that it will persist.

The Federal Open Market Committee is expected to raise rates 75 basis points by Wall Street firms including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Barclays Plc, who cite rising inflation expectations among Americans in looking for the largest increase in nearly three decades.

The Fed will announce a decision and publish fresh forecasts at 2 p.m. Wednesday in Washington. Powell will hold a press conference 30 minutes later.

“The usual rule is, if you are worried about how your moves are going to affect financial markets, you move gingerly,” said Barclays senior economist Jonathan Millar, among the first to call for 75 basis points. “You worry about the risk of breaking something. In this case, it’s worth breaking something. We are at a very critical point where it looks like their credibility is starting to erode.”

Powell last month said the Fed wasn’t actively considering a 75 basis-point move, while not ruling it out if conditions changed. While the Fed chief laid out a baseline of 50 basis-point increases in June and July, he also hedged by saying that hinged on the economy evolving as officials expected.

On Friday, data showed the consumer price index increased 8.6% in the 12 months through May, the most in 40 years and defying predictions that inflation had already peaked. The Fed has a goal of 2% inflation, based on a separate measure — the personal consumption expenditures price index, which was running at 6.3% in April.

Even more concerning for central bankers was the University of Michigan’s sentiment survey showing respondents expecting prices to advance 3.3% annually over the next five to 10 years, the most since 2008 and up from 3% in May.

What Bloomberg Economics Says…

“The FOMC will raise federal fund rates by 75 bps at its June meeting. One or more dovish members of the committee may well dissent. Given surprisingly elevated inflation readings in recent months, Powell will argue that a supersized move is needed to preempt inflation expectations from unanchoring.”

— Anna Wong, chief US economist

— To read more click here

Both Barclays and Jefferies, who were among the first to change their Fed calls, cited the Michigan survey as key evidence that inflation expectations could be starting to become unglued, with Jefferies calling it a “game changer.”

Market Pricing

“The goal of the Fed is for inflation not to become entrenched,” said Diane Swonk, chief economist at Grant Thornton LLP. “People’s behaviors are changing. It will be that much harder to derail later on. You can’t make the mistake of the 1970s. You have to deal with bringing demand down in a supply-constrained world, as painful as that may be.”

Markets started pricing in a 75 basis-point move following the New York Fed’s survey on Monday showing US consumers expect prices to rise even faster over the next year, as well as reports from the Wall Street Journal and other news outlets including Bloomberg News on the likelihood of such a move.

The central bank typically moves deliberately, trying to avoid excess volatility such as 2013’s taper tantrum, when Treasury yields surged suddenly under then-Fed Chair Ben Bernanke.

“Market pricing for aggressive Fed action has accelerated, and we believe policy makers are likely to lean into it,” said Robert Dent, a Nomura Securities economist. The Fed is concerned by “upside risk to the inflation-generating process. Markets have now provided the Fed with an opportunity to move more swiftly.”

While Powell has pledged to be “nimble,” a 75 basis-point move would be a striking change in how the chair guides markets. The FOMC gave investors several months of notice before stopping its purchases of Treasuries and mortgage-backed securities and raising interest rates from zero in March.

“Chair Powell just hates surprising markets,” said Vincent Reinhart, chief economist at Dreyfus and Mellon. While 75 basis points seems likely, “there is a higher chance than currently in markets that they stay on their original plan.”

Dot Plot

The median dot of their rate projections could rise to around 3% for year’s end, or 2 percentage points higher than the current rate. In March, officials estimated their policy rate would end 2022 around 1.9%.

That said, Fed leaders prepare their dot forecasts in conjunction with research teams well in advance, so there’s a risk the dots may not reflect the latest urgency over inflation.

While Powell has said his goal is a “softish landing” of low inflation and a still-robust labor market, the FOMC forecasts could also give insight into how comfortable the committee would be with some boost in unemployment to help cool off the economy and inflation. The projections could show the jobless rate rising in 2023 and 2024 from a 3.5% forecast for this year.

“Right now, they sound like inflation, inflation, inflation,” said Thomas Costerg, senior U.S. economist at Pictet Wealth Management. “What we’re going to try to read in between the lines is whether they truly believe or not that a recession is what’s needed to calm inflation. The code for recession is whether they see unemployment going up in 2023 or not. That would be a very bad message.”

The tone of Powell’s press conference emphasizing Fed commitment to controlling inflation will be especially important ahead of his June 22 and 23 semi-annual testimony before Congress.

Lawmakers are critical of high prices, which have become a top concern of Americans, hurting the standing of President Joe Biden’s Democrats with voters ahead of November congressional elections.

“He will be pretty somber,” said Reinhart. “You are going to have a relatively hawkish message to convey. He’s got to wear the black suit and dark tie.”

–By Steve Matthews (Bloomberg)

Tags: bloomberg newsinflationThe Federal Reserve
Previous Post

Auto dealers request more virtual F&I training

Next Post

Bank of America to help employees buy EVs

Related Posts

Bruce Newmark hosting a panel with Robert DeJarnette, VP of Risk Management at Consumer Portfolio Services, Charlie King the Chief Technology Officer at Arivo Acceptance, Eduardo Perez the Chief Customer Officer at Tricolor, and Scot Seagrave the Chief Executive Officer at FinBe USA during Auto Finance East Summit 2025 in Nashville, Tenn.
Risk Management

Subprime lenders see opportunity in recession talks  

May 20, 2025
Inside A Flo Electric Vehicle Charger Assembly Facility
Risk Management

Charging installations drop as Trump ramps up attacks on EVs

May 20, 2025
Auto Finance News Editor with Executive Panel
Risk Management

LTV, negative equity concerns escalate with tariffs  

May 19, 2025
Next Post
bank of america building

Bank of America to help employees buy EVs

Stay Informed with Our Newsletters

PowerSports Finance

The Roadmap Podcast

ABOUT US

HELP CENTER

ADVERTISE

PRIVACY TERMS

ADA COMPLIANCE

CODE OF JOURNALISM ETHICS

Manage Cookie Consent

EXECUTIVES OF THE YEAR

AUTO FINANCE EXCELLENCE AWARDS

MAGAZINE ARCHIVE

INDUSTRY GLOSSARY

facebook linkedin twitter podcast podcast
© 2025 Royal Media
No Result
View All Result
  • Home
  • News
    • All News
    • Capital & Funding
    • EVs
    • Technology
    • Management
    • Powersports Finance News
    • Risk Management
    • Sales & Marketing
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Features
    • Latest Issue
    • Features
    • New Tracks
    • Car Culture
    • Staffing Shuffles
    • Under The Hood
    • Spotlight
    • Issue Archive
  • Webinar
  • Podcast
  • Big Wheels Data
  • SUBSCRIBE
  • Log In / Account

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • News
    • All News
    • Capital & Funding
    • EVs
    • Technology
    • Management
    • Powersports Finance News
    • Risk Management
    • Sales & Marketing
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Features
    • Latest Issue
    • Features
    • New Tracks
    • Car Culture
    • Staffing Shuffles
    • Under The Hood
    • Spotlight
    • Issue Archive
  • Webinar
  • Podcast
  • Big Wheels Data
  • SUBSCRIBE
  • Log In / Account

THIS WEBSITE USES COOKIES

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “I CONSENT”, you consent to the use of ALL the cookies.

Cookie settingsI CONSENT

Review our Cookie Policies
.
Manage Cookie Consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
34f6831605sessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
a64cedc0bfsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
cookielawinfo-checkbox-advertisement1 yearSet by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category .
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
crmcsrsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
JSESSIONIDsessionThe JSESSIONID cookie is used by New Relic to store a session identifier so that New Relic can monitor session counts for an application.
LS_CSRF_TOKENsessionCloudflare sets this cookie to track users’ activities across multiple websites. It expires once the browser is closed.
LSKey-c$CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
CookieDurationDescription
__cf_bm30 minutesThis cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
_zcsr_tmpsessionZoho sets this cookie for the login function on the website.
663a60c55dsessionThis cookie is related to Zoho (Customer Service) Chatbox
e188bc05fesessionThis cookie is set in relation to Zoho Campaigns
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
CookieDurationDescription
_ga2 yearsThe _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gid1 dayInstalled by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
CONSENT2 yearsYouTube sets this cookie via embedded youtube-videos and registers anonymous statistical data.
vuid2 yearsVimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
CookieDurationDescription
__Host-GAPS2 yearsThis cookie allows the website to identify a user and provide enhanced functionality and personalisation.
_dc_gtm_UA-1038974-31 minuteUsed to help identify the visitors by either age, gender, or interests by DoubleClick - Google Tag Manager.
_fbp3 monthsThis cookie is set by Facebook to display advertisements when either on Facebook or on a digital platform powered by Facebook advertising, after visiting the website.
fr3 monthsFacebook sets this cookie to show relevant advertisements to users by tracking user behaviour across the web, on sites that have Facebook pixel or Facebook social plugin.
test_cookie15 minutesThe test_cookie is set by doubleclick.net and is used to determine if the user's browser supports cookies.
VISITOR_INFO1_LIVE5 months 27 daysA cookie set by YouTube to measure bandwidth that determines whether the user gets the new or old player interface.
YSCsessionYSC cookie is set by Youtube and is used to track the views of embedded videos on Youtube pages.
yt-remote-connected-devicesneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt-remote-device-idneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt.innertube::nextIdneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
yt.innertube::requestsneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
CookieDurationDescription
caf_ipaddrsessionNo description available.
citysessionNo description available.
countrysessionNo description available.
gnt_eidsessionNo description available.
gnt_eu6 hoursNo description
iamcsrsessionZoho (Customer Support) sets this cookie and is used for tracking visitors (for performance purposes)
systemsessionNo description available.
traffic_targetsessionNo description available.
Save & Accept
Powered by CookieYes Logo