Wall Street Today | Fed Officials Say Higher Interest Rates Are Needed to Reach 2% Inflation Goal

Three Federal Reserve officials on Monday said policymakers will need to raise interest rates further this year to bring inflation back to the central bank’s goal.Bond Market Gets Limited Relief as Yields Reach 2023 Highs.

The Fed held interest rates steady in June after raising them for 10 straight meetings to a range of 5% to 5.25%. Most policymakers expect to increase rates by a further half percentage point by the end of the year, according to projections released after their June gathering.

US consumer borrowing slowed to a more than two-year low in May, reflecting the first decline in non-revolving credit since the onset of the pandemic.

Total credit rose $7.2 billion, the smallest advance since November 2020, Federal Reserve data showed Monday. The figure, which isn’t adjusted for inflation, was lower than all forecasts in a Bloomberg survey of economists. 

Non-revolving credit, such as loans for school tuition and vehicle purchases, decreased $1.3 billion, the first decline since April 2020.

Chicago Federal Reserve Bank president Austan Goolsbee on Friday said he does not disagree with his fellow US central bankers that rates will need to rise a couple more times this year to beat back too-high inflation.

"I haven't seen anything that says that's wrong - that is on the golden path" of bringing inflation down to 2% without causing a recession, Goolsbee said in an interview on CNBC. "That would be a Fed triumph and that can involve a couple of rate increases over this year."

Major banks are facing one of the biggest regulatory overhauls since the financial crisis, setting up a clash over the amount of capital that they have to set aside to weather tumult.

The Federal Reserve’s top banking regulator, Michael Barr, said he wants Wall Street banks to start using a standardized approach for estimating credit, operational and trading risks, rather than relying on their own estimates. He added that the Fed’s annual stress tests should be rejiggered to better capture dangers that firms can face. The changes stem from a months-long review to align US rules with a set of international standards known as Basel III.

Oil dropped as light summer trading volumes exacerbated pressure from technical resistance levels.

West Texas Intermediate settled below $73 a barrel, putting a lid on last week’s supply-driven rally. The commodity briefly rose above its 100-day moving average on Friday, but the key level has since provided resistance to further gains. Meanwhile, brokers noted that trading flows remain thin, as is typical in the summer, which has kept price moves choppy.

Investors are once again flocking to the certainty — and relatively high yields — of cash as conviction grows that the Federal Reserve will continue raising interest rates. 

Shares of Covid-19 manufacturer Novavax were surging after the company said it will receive $350 million from Canada to settle forfeited vaccine doses that were supposed to be delivered.

The payment will be made in two equal installments this year, according to a securities filing on Friday.

After about a month on the public market, Wall Street is mostly bullish on the restaurant chain. Shares were gaining 10% on Monday to $43.53 — still about twice its IPO price — after several analysts initiated coverage of the stock with Buy or equivalent ratings.