Michelle Bowman, a member of the US Federal Bank (FED), said that it may need to further increase interest rates in order to control inflation.
Considering the factors such as inflation, strong consumer expenditures, recovery in the housing sector and strong situation in the labor market, Bowman said that he supports the increase in quarter points last month.
Bowman referred to the Board, which determines the interest rates in the Federal Open Market Committee (FOMC), said, “I also anticipate that additional interest rate hikes will be needed in the future in order to direct inflation to the 2 percent target.”
Bowman also emphasized that monetary policy is not “a way determined in front of it and that future decisions will be shaped according to data” and said, “If future data shows that progress on inflation is slowing down, we must be ready to increase the federal fund rate at a future meeting”.
Markets continue to fight the Fed
Although additional increase messages come from the Fed officials, the market does not care about these statements. According to the information we have compiled from CME’s Fedwatch data, the FOMC meeting, which will take place on September 20 after 44 days, foresees that interest rates are fixed in the current interest range of 5.25-5.50. Investors, on the other hand, have proved this possibility of 84.5 percent.
On the other hand, the market Fed sees the possibility of an interest rate hike by 25 basis points at the same meeting as 15.5 percent.
Inflation data will be decisive
While the markets continue to predict what Fed will do, investors’ eyes will be released on Thursday. In the United States, which was announced last Friday, expectations create employment, a cooling in the labor market is observed, while the answer to whether interest rates will be sufficient or not, the inflation data lies in the details of whether or not the inflation data arrives parallel to the expectations and lower breaks.
While the expectation is that nucleus inflation does not decrease from 4.8 percent to 4.7 percent, an inflation above this expectation may lead to an expectation that interest rate hikes can be continued on the markets.
