The inflation target is ambitious
Fed officials said they are keeping a close eye on key economic indicators, but investors should expect the numbers to remain mixed even with lower inflation, according to Chris Harvey, head of equity strategy at Wells Fargo.
“We’re in a good position that the economy hasn’t cracked,” he said on Bloomberg TV. “Eventually we will get to a level of inflation below the current level, but I think 2% is just the rate we aspire to, and nothing else.”
Part of the impact of the Fed’s continued rate hikes may not yet be clear, said Sarah Hunt of Alpine Woods Capital Investors.
“I think there are parts of the economy that don’t show that effect quickly,” she said on Bloomberg TV. “Wall Street has been so used to focusing on quarterly results that we lose sight of the fact that wage negotiations don’t happen every time the Fed changes rates.” The interest, rather, occurs once a year or once every two years, depending on the sector.”
Will the Fed achieve a soft or sharp decline? Or between the two?
At the same time, data on Thursday also showed that inflation in the eurozone slowed less than expected, and underlying price pressures rose to a new record high, adding pressure on the European Central Bank to raise interest rates. Interest rates at the European Central Bank are expected to rise above 4%, with the German benchmark bond yield increasing above 2.7%.
