Fed Likely to Hike by Another 75 Bps This Month, Leaning Against 1.00% Hike – DJ
2022.07.18 13:22
Fed Likely to Hike by Another 75 Bps This Month, Leaning Against 1.00% Hike – DJ
By Senad Karaahmetovic
The U.S. Federal Reserves are likely to deliver another 0.75% rate hike later this month, according to Wall Street Journal’s Nick Timiraos.
The Fed is reportedly leaning against hiking by 100 bps despite a robust June CPI report.
Timiraos, a closely watched journalist regarding Federal Reserves, is the chief economics correspondent for The Wall Street Journal. Prior to the Fed’s rate decision in June, markets reacted to his piece that the Fed is set to raise rates by 75 bps.
Timiraos’ reporting is in line with recent comments from policymakers.
“You don’t want to overdo the rate increases. A 75-basis-point hike, folks, is huge. Don’t say, ‘Because you’re not going 100, you’re not doing your job,’” Fed governor Christopher Waller said last week.
“We knew this inflation report was going to be ugly, and it was. It was just uglier than we thought,” said Mr. Waller, before adding, “we don’t want to make policy on one data point, and that’s kind of a critical thing.”
The Fed hasn’t hiked by 1.00% since it began using the federal-funds rate as its key tool in the early 1990s.
Jonathan Pingle, Chief US Economist at UBS, also expects the Fed to hike by 0.75% at their next meeting later this month. Still, he recognizes that the door is open for a surprising 1.00% rate increase.
“No one has ruled out a 100 bp rate hike though, and Governer Waller indicated it could be on the table for consideration at the July FOMC meeting. After the June FOMC meeting guidance coming via the press, analysts and market participants will be watching media sources closely for any change in guidance for July from the Committee. Our base case has been that the FOMC raises rates by 75 bps at the July meeting, in part because we expected a big gain in the CPI to be reported this week,” Pingle told clients in a note.
“However, the CPI release on the whole we do think raises the odds of a 100 bps rate hike at the July meeting,” he added.
