The Fed is expected to hike interest rates in May and June to deal with runaway inflation.
- With the unemployment rate close to a record low, inflation is at the highest in four decades, and a surge in global commodity prices is likely to persist.
- Reuters’ poll of over 100 economists expects two half-point rate hikes this year, the first move since 1994, pushing the federal funds rate to 1.25% to 1.50% by the June meeting.
- A majority of the economists expect 50 basis points in May, and a still-solid majority stated that the Fed would follow up with 50 basis points in June.
- James Knightley, the chief international economist at ING, stated that they expect the Fed to deliver half-point interest rate increases at the May, June, and July policy meetings.
Russia’s invasion of Ukraine is making it challenging to forecast when inflation will eventually slow down.
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