FirstFT: US rates expected to rise further, economists warn

FirstFT: US rates expected to rise further, economists warn

The Federal Reserve will have to take tougher-than-expected action to keep inflation in check, with at least two more quarters of rate hikes this year, according to a majority of leading academic economists surveyed by the Financial Times. expected to be expected.

The latest research, conducted in partnership with the Kent A. Clarke Global Market Center at the University of Chicago Booth School of Business, predicts the Fed’s forecast. The base rate will be raised to at least 5.5% this year.

The Federal Funds futures market suggests investors are in favor of raising the current range of 5-5.25% in July by one more quarter-point, the highest level since mid-2007. .

The findings were released ahead of the Federal Reserve’s latest interest rate meeting, which begins tomorrow. The US central bank is expected to pause its aggressive monetary policy tightening after its 10th consecutive rate hike since March 2022, leaving the door open for further tightening.

Of the 42 economists surveyed between June 5 and June 7, 67% expected the federal funds rate to peak this year between 5.5% and 6%. That percentage rose from 49% in the previous survey, which was conducted just days after a string of bank failures in March.

“We haven’t done enough to bring inflation down yet,” said Dean Croshore, a 14-year economist at the Fed’s Philadelphia Reserve Bank. “They are on the right track, but the road will be longer and winding than they thought.”

The latest inflation data will be released tomorrow. Annual core inflation, which excludes energy and food costs, rose 5.5% in April.

The Fed is expected to update its rate forecasts after its two-day meeting on Wednesday.

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