Disconnect between market and Fed is ‘ongoing,’ says fmr. Fed Vice Chair Roger Ferguson
America’s top central banker has warned that the Federal Reserve is prepared to switch back to bigger interest rate rises to fight inflation, if necessary. Fed chair Jerome Powell told the Senate Banking Committee that the central bank has “more work to do”, even though the full effects of its tightening have not been felt yet. Powell told senators that interest rates are likely to peak higher than previously thought, given the strength of the US economy.
Powell says:
The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated.
If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.
The markets now estimate there is over a 50% chance that the Fed lifts interest rates by half a percentage point later month, having slowed to quarter-point rises in its last two meetings.
And the probability of 50bp at the next meeting is now above 50 percent. That is about where it should be now–and we’ll see what’s in the jobs report, CPI, and other data. pic.twitter.com/sWAIRHvVLU
NN: The Fed is still getting it wrong. They are not even close to beating inflation out of the system. They need to get on it and stay on it until they get the 2% inflation rate goal they set. It will not be easy. And i am now predicting a FED FUNDS rate of 8 to 10%.. Not the 6% Wall Street finally is pricing in.