Markets are anticipating a faster than expected interest rate hike, while Federal Reserve officials might be also contemplating the same idea.
According to reports central bank policymakers are assessing the possibility of a 75-basis point increase to the benchmark rate during this week’s meeting.
First the Wall Street Journal reported on the possibility Monday and now CNBC’s Steve Liesman supported the idea. “A 75-basis point move is a real distinct possibility,” he said.
Recent changes are setting a new economic outlook in the U.S. After analysts thought that inflation peaked last March, now a new 40-year high recorded last week is sending alarms to markets, forcing the Central Bank to move faster to tame inflation. Also, recent jumps in bond yields are adding pressure on the Fed.
After the Wall Street Journal report Goldman Sachs also changed its projection of a 50-basis point and now sees consecutive 75 basis point rate hikes in June and July. A 50-basis point for September and 25-basis point moves for November and December.
The Fed’s goal now would be in a range of 3.25%-3.5% by the end of the year.