It’s been a year since the US Federal Reserve (Fed) started raising interest rates since March last year, but concerns are growing as another year of high-intensity tightening is expected amid a rebound in inflation.
France’s consumer price index (CPI) rose 7.2% in February, the largest increase since 1999, and Germany’s consumer price index (CPI) rose 9.3% on the 1st (local time), based on the European Central Bank (ECB) calculation, to 9.2% in January (9.2%). ) rebounded from As a result, the European and US government bond markets were shaken at the same time, and the 10-year US government bond yield on the 1st exceeded 4% for the first time since November. The fact that China’s manufacturing Purchasing Managers’ Index (PMI) reached its highest level in 11 years in February seems to have been interpreted as a factor stimulating inflation.
As inflation rises, Fed hawks are warning that the final rate will exceed at least 5.4% (5.25-5.5%). Federal Open Market Committee (FOMC) Governor Neil Kashkari of the Federal Reserve Bank of Minneapolis (Fed), who has voting rights, attended an event for businessmen in South Dakota that day and said at the next FOMC regular meeting, “Opening the possibility of both 0.25 percentage points and 0.5 percentage points. He left open the possibility of a big step (0.5% point). “I think other members of the committee will agree that less tightening is more risky than excessive tightening,” he added, suggesting an upward revision from his last estimate of 5.4% on the new dot plot to be released in March.
The market is ahead of the hawkish rhetoric of Fed officials and is raising the final rate forecast. According to the FedWatch of the Chicago Mercantile Exchange, which reflects the prospects of investors in the futures interest rate market, the Fed raises interest rates in July following March, May, and June, raising the possibility that the final rate will reach 5.50-5.75% or more. Investors are predicting a 30% chance of a big step in March.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.