As financial markets continued to absorb Thursday’s admission by a Federal Reserve official that the central bank’s policy rate may need to go to as high as 7%, analysts came up with an even more surprising conclusion: That 7% won’t likely be high enough to win the fight on inflation.
“The recent improvement in inflation pressures turning over from peak levels has seemingly in some ways blinded many investors as to the need for the Fed to aggressively continue along a pathway to higher rates,” they said. “While a 7.7% annual gain in the CPI [or consumer price index] is an improvement from the 8.2% annual pace reported prior, it is hardly anything to celebrate or a clear signal for the Fed to move to easier policy with a 2% target range still a distant accomplishment.
As of Friday, fed-funds traders mostly expect the Fed’s main policy rate target to get to either between 4.75% and 5%, or between 5% and 5.25%, by the first half of next year. However, standard interpretations of the so-called Taylor-rule estimate suggest that the fed-funds rate should be around 10%, according to the UniCredit researchers.
7, 10, 15 or whatever, he is just bluffing, the market is not pricing anything like that.
In other words we have shorted the market
That is terrible policy.
Ask me how I know Bullard, Stifel, and Co. have short positions... Pathetic...and conveniently all from the old 'inflation is transitory' crowd.
This is as ludicrous as it gets. Let's not forget this guy was only 4.5 pp off with his Q2 GDP estimates. Then some other ppl come to top his ludicrous remarks. The Fed should downright pause its hikes bc the economy warrants it (inflation included):