The Wall Street Journal (WSJ) reporter Nick Timiraos, known as the “Federal Federal Reserve’s megaphone,” wrote on Tuesday (7th) that Fed Chairman Jerome Powell may warn during his testimony that strong economic activity this year will lead the Fed to raise interest rates. Exceed their expectations to combat high inflation.
Before the deadline, major U.S. stock index futures rose slightly,Dow Jones IndexFutures rose 0.07%,S&P 500 IndexFutures long 0.16%,Nasdaq 100 futures rose 0.32%.U.S. 10-Year Treasury Bond YieldReported at 3.93%, down from the previous high of 4%;dollar indexIt edged up to 104.47.
Some market analysts previously pointed out that Fed Chairman Jerome Powell may echo the suggestion of other Fed officials that if the economic data continues to be hot, the terminal interest rate will be higher than previously expected. In December, most Fed officials believed the Fed would raise the federal funds rate to a range of 5% to 5.5% this year and maintain it through 2024.
Powell will testify before the Senate Banking Committee later, and will continue to testify before the House Committee tomorrow (8th). This will be its last public talk on interest rate policy ahead of the March 21-22 monetary policy meeting, and its last chance to influence market expectations.
Since the non-agricultural and inflation data in January far exceeded expectations, market expectations for the Fed to re-accelerate the pace of interest rate hikes continued to heat up. So far, the CME Group FedWatch Tool shows that the market expects the Fed to raise interest rates by 1 yard (25 basis points) in March. The probability is about 70%, and the possibility of raising interest rates by 2 yards (50 basis points) has risen to 30%. %.
With inflation more resilient than expected, several Fed policymakers said the central bank could raise rates far more this year than previously expected. Three Federal Reserve Bank presidents, including Cleveland Fed President Mester and “Eagle King” Bullard, said they support a 2-yard rate hike in March. Former US Treasury Secretary Summers also said that the possibility of raising interest rates by 2 yards in March should not be ruled out.
At the beginning of this month, Nomura, who raised interest rates by 3 yards (75 basis points) for the first time last year, once again made a bold prediction, saying that high inflation would force the Fed to raise interest rates by 2 yards in March, and predicted that the end-point interest rate was expected to be raised to 5.625%.
At the same time, key inflation data indicators such as the US non-agricultural employment report to be released this week and the consumer price index (CPI) report next week have also become a reference for judging the extent of the Fed’s interest rate hike in March.
