Fed may have to raise interest rates sharply

Information from the Fed said that the peak of inflation in May 2022 could cause the Fed to raise interest rates by 0.75%.

Federal Reserve Chairman Jerome Powell has not considered raising an additional 0.75% to deal with inflation.

Actual situation after May inflation peaked in 40 years, Wall Street thinks that Powell may have to change this view to raise interest rates.

US stocks fell sharply in recent sessions. Yields on 10-year US government bonds to 3.27%, if interest rates increase by 0.75%, it means that the Fed is really worried about inflation.

Fed may raise interest rates

Investors are betting 60% chance that the Fed will raise interest rates by 0.5%. The probability of raising interest rates by 0.75% has also increased from 3% last week to 40% until now.

Economists at Barclays think the Fed will announce a rate hike of 0.75% on June 15, 2022.

Investors did not rule out the possibility that the Fed would raise interest rates by 0.75% within the week. The scenario of interest rate hike may take place in the near future.

The figures show that this probability is currently 50%, the probability of a 1% increase next month is more than 25%.

Investors also noticed when Powell and other Fed members repeatedly said that decisions were based on numbers.

Inflation is still increasing, that’s why the possibility of raising interest rates by 1% cannot be ruled out.

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