Wall Street bulls: Fed may raise 4 yards this week, defying market expectations |

Wall Street bull Ed Yardeni, president of Yardeni Research, believes that the Federal Reserve could defy market expectations this week and raise interest rates by 4 yards (100 basis points).

Yardeni said the Fed could decide to accelerate the process of raising interest rates and be more aggressive about tackling inflation. “It seems to me that they are committed to raising rates significantly at their next meeting. I think they will raise rates by 100 basis points, not the 75 basis points the market expects, and possibly one more,” Yardeni said.

According to CME’s FedWatch tool, the market now sees an 80% chance of a third consecutive 3-yard rate hike (75 basis points) and a 20% chance of a 4-yard rate hike.

Inflation edged to 8.3% in August from 8.5% in July, but remained close to a 40-year high and well above the central bank’s 2% target.

Yardeni said the Fed knew it would take a long time for rate hikes to start having an impact on the economy. But the Fed has a reputation for fighting inflation and is trying to tame it by dramatically raising interest rates.

According to the results of economists interviewed by Bloomberg, the Fed will raise interest rates in a hawk-like fashion, raising interest rates by 3 yards this week, raising the target range of the federal funds rate to 3.00-3.25%. The peak of that target range will be 4% by the end of the year, rising further next year and not falling to 3.6% until 2024.

Robert Dent, senior US economist at Nomura Securities, said: “We expect the Fed to continue raising interest rates until inflation data falls, and the CPI in August makes the Fed’s mission that much more urgent . If high inflation continues for a longer period, wage prices are concerned. about increasing spiraling and expectations of inflation running out of control have also increased.”


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