FED’S RATE HIKES: EXPECTATION OF 50BPS FOR THE UPCOMING MARCH RATE HIKE
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Author: Amar – Technical Analyst

Federal Reserve Governor Christopher Waller said this morning he still believes a 50-basis point rate hike in March is a possibility if economic data strengthens. a full percentage point by the middle of this year. Following the attack on Ukraine, a more modest tightening may be appropriate. The Fed is expected to start reducing its balance sheet no later than the July meeting. Moreover, according to him, the inflation rate is too high and alarming at the moment. This is why the Fed must act quickly.

He added that appropriate interest rate policy brings the target range up to 1 to 1.25 percent early in the summer. Once the initial rate hikes are made, more hikes will be needed if inflation stays high, Waller said, or they could slow or halt if inflation eases in the second half, as he expects. The state of the world could be different after the Ukraine attack, and that could mean a more modest adjustment is in order. But it is still too early to gauge the impact of the conflict on the US or the global economy. And with consumer prices rising at their fastest pace in 40 years, the Fed must “act decisively on the data to maintain our credibility that we will bring inflation down. “For the past week, Fed policymakers have largely signaled to start the next round of U.S. rate hikes with a modest quarter-point hike, and following Russia’s invasion of Ukraine, traders reduced bets on a higher hike in March.