![]() Meanwhile, 75 is a very middling type of hike. “Fifty was the big round number six months ago. “The Fed’s trying to erase any perception that they’re behind the curve,” Steven Englander of Standard Chartered Bank told Bloomberg. The Fed is behind the curve, and they know it.”īloomberg News reports that some analysts are suggesting that a full percentage point increase is now possible. And Diane Swonk, chief economist at Grant Thornton, told the Journal that the recent data mean that Fed needs to get more aggressive: “They’ve got to go now with 75. ![]() “We believe that risk-management considerations call for aggressive action to reinforce the Fed’s inflation-fighting credibility,” Barclays economists wrote in a Monday report cited by Timiraos. Two investment banks, Barclays and Jefferies, revised their forecast for this week’s rate hike to 75 basis points after Friday’s inflation data (a basis point equals 1/100th of 1%). And if we don’t see that, then we’ll have to consider moving more aggressively,” Powell said at the time. Timiraos notes that Federal Reserve Chairman Jerome Powell, while loath to surprise markets, opened the door to such a move in an interview last month “What we need to see is clear and convincing evidence that inflation pressures are abating and inflation is coming down. “Investors in interest-rate futures markets placed a nearly 30% probability on the larger 0.75-percentage-point increase on Monday afternoon, up from around 4% before last Friday’s inflation reports,” he writes. ![]() The Wall Street Journal’s Nick Timiraos reports that troubling recent inflation readings, including mounting consumer expectations for continued price increases, will likely lead Fed officials to consider a 0.75 percentage-point hike at their meeting this week. The Federal Reserve is expected to raise interest rates again this week, and Friday’s brutal consumer price index report, which showed inflation reaching a new 40-year peak of 8.6% a year, has sparked speculation that the bank’s policymakers may move aggressively, hiking their benchmark rate by more than the 0.5 percentage point they had signaled. ![]()
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