Would the Fed really hike rates? This is what would have to happen

[Pelican Press 0]

Would the Fed really hike rates? This is what would have to happen

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, I continue to see the risk that at a future meeting we may need to increase the policy rate further should progress on inflation stall or even reverse.” However, in the Federal Open Market Committee’s March update of its “dot plot” grid of individual members’ rate expectations, none of the 19 members indicated rate hikes ahead and only two expected there not to be at least one rate reduction this year. Fed funds futures markets aren’t pricing in any possibility of an increase this year and only a 14.5% probability of no cuts, according to the CME Group’s Fed Watch tool as of Friday afternoon. Yet the market has had to adjust its expectations dramatically this year as the inflation data has disappointed, going from pricing in at least six cuts down to at most two. Sticky or resurgent inflation data, contrary to the steady declines seen from mid-2022 to late 2023, could always force further changes. “I don’t know that that’s a base case, but I do think [investors] need to be aware that the committee right now is saying inflation is holding in in a way that isn’t continuing that steady decline,” former Kansas City Fed President Esther George said Friday on CNBC. “Under that scenario, they are keeping all of their options on the table, including a rate increase.”

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Federal Reserve Bank,Inflation,Interest Rates,Economy,Markets,Prices,business news
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