Fed will leave rates alone, but changes in Powell’s statement could be just as scary

STOCK and bond investors are celebrating the US Federal Reserve’s decision to stop raising interest rates and declare victory over inflation. Unfortunately, somebody forgot to tell the higher-ups at the Fed.

This Wednesday (Sep 20), the Fed will likely leave rates unchanged at a 22-year high of 5.25 per cent to 5.5 per cent, pausing for the second time in its last three meetings. Still, chair Jerome Powell could give financial markets a nasty surprise if his rhetoric in his usual post-meeting statement suggests more rate hikes could be on the way.

“The Fed will likely be on hold at their next decision on Wednesday, but the next change in policy is still more likely a hike than a cut,” warned Bill Adams, chief economist at brokerage Comerica Bank.