Fed Officials See 2 Potential Rate Hikes By The End Of 2023
The Fed took a hawkish turn on Wednesday as they pencilled two potential rate hikes in 2023, sooner than previous estimates. The Fed also edged closer to unveiling plans to taper its $ 120B a month of bond purchases.
"The logical response to today’s information is that interest rates are going to go higher, and they will probably be going higher faster than people may have thought,” Marcus Moore by Reuters
The change in tone doesn’t come as a surprise as price levels have considerably increased through the months of March to May. These also bring additional volatility to markets as investors will gauge whether the Fed could turn even more hawkish in the coming months.
“A more extreme reaction could lay ahead if signs appear of stronger-than-expected inflation and other factors that could push the Fed to taper faster than anticipated, some market participants said” by Reuters
- Shipping bottlenecks, rising producer prices in China, cash-rich consumers in the U.S. and worker shortages may continue to drive inflation past the “transitory” levels
- The Fed is showing that it is ready to act in case the economy overheats
- These may bring additional volatility throughout the months of July and August
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