“We will continue to raise rates for a while. Given the clear and disappointing lack of progress in curbing inflation, I expect we will move well over 4% by the end of the year ”. Thus the president of the Federal Reserve of Philadelphia, Patrick Harker, in a speech delivered yesterday, according to what was reported by the CNBC website.
Harker indicated that the highest level of interest rates has done little to keep inflation in check so far. The next meeting of the FOMC, the monetary policy arm of the Federal Reserve, is scheduled for two days 1-2 November.
The consensus predicts the fourth consecutive rate hike of 75 basis points, aimed at curbing US inflation, from the current range between 3% and 3.25%.
Yesterday, 10-year Treasury rates soared to 4.22%, taking a jump of more than 20 basis points in two sessions, discounting more aggressive tightening maneuvers by the Fed.
“At some point, next year, we will stop the rate hikes – continued Harker – At that point, we should keep rates in the tightening phase for some time, to make monetary policy take its course. work. It will take a while for the higher costs of capital to affect the economy. After that, if necessary, we will be able to raise rates again, depending on the data ”.
Watch out for futures on fed funds expiring in May 2023 which, in the last hours and for the first time, have jumped above the 5% threshold, confirming how traders expect Jerome Powell’s Fed to raise rates until that time. level before stopping, in its fight against inflation.