(12/01) December December Time To Remember✂️

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Federal Reserve Chair Jerome Powell provided a clear signal that the central bank is on track to raise interest rates by a half percentage point at its next meeting, stepping down from an unprecedented series of four 0.75-point rate rises aimed at combating high inflation.

Mr. Powell, in a speech Wednesday, said an overheated labor market needed to cool more for the Fed to be confident that inflation would decline toward its 2% goal.

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Because the Fed has raised rates rapidly and it takes time for those moves to influence the economy, it would make sense for officials to slow rate increases, he said at an event at the Brookings Institution. “The time for moderating the pace of rate increases may come as soon as the December meeting,” he said.

Fed officialslifted their benchmark rate by 0.75 percentage point on Nov. 2to a range between 3.75% and 4%, which is up from near zero in early March. Many officials have signaled they are leaning toward approving a 0.5-point increase at their Dec. 13-14 meeting.

Investors have been eager for evidence that the central bank would slow its pace of rate rises, andmarkets ralliedafter Mr. Powell’s remarks. The Dow Jones Industrial Average rose 2.2%, or about 735 points, enough to put the index back in a bull market, defined as a 20% rise from a recent low. The yield on the benchmark 10-year Treasury note declined to 3.699% Wednesday from 3.746% Tuesday.

Mr. Powell suggested Fed officials were moving into a new phase of policy tightening in which they would try to judge just how high rates need to rise. “My colleagues and I do not want to overtighten because … cutting rates is not something we want to do soon,” he said. “That’s why we’re slowing down, and I’m going to try to find our way to what that right level is.”

Mr. Powell reviewed signs of progress on the inflation fight, including a slowdown in interest-rate sensitive sectors of the economy such as housing and improving supply-chain conditions. But he said that declines in rents and goods prices might be insufficient if firms don’t slow their hiring to bring the strong demand for labor into better balance with a shortfall in the supply of workers.

Labor demand has eased some in recent months.Job openingstotaled a seasonally adjusted 10.3 million in October, the Labor Department reported Wednesday. That was down from 10.7 million in September but far exceeded the 6.1 million unemployed people seeking work in October.

The labor market “shows only tentative signs of rebalancing, and wage growth remains well above levels that would be consistent with 2% inflation,” Mr. Powell said. “Despite some promising developments, we have a long way to go in restoring price stability.”

The Fed has raised interest rates this year at the most rapid pace since the early 1980s to battle inflation that is running near a 40-year high. Officials seek to reduce inflation by slowing the economy through tighter financial conditions—such as higher borrowing costs, lower stock prices and a stronger dollar—which typically curb demand.

The U.S. economy shrank slightly in the first half of this year, but grew more briskly in the third quarter than previously estimated. Gross domestic product increased at an inflation-adjustedannual rate of 2.9%from July through September, up from an initial estimate of 2.6%, the Commerce Department said Wednesday.

Awave of layoffshas rippled across industries such as tech, entertainment and real estate. CNN on Wednesday there is a possibility of a US stock market rally in the next coming weeks.

The Feds easing of rate hikes will signal a great sign of a potential "bull run" - let's brace ourselves and 'ride the wave'!.

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