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Citi forecasts historic 100-basis point Fed rate hike after inflation shocker
Fed needs to quickly respond to hot inflation data: Strategist
Federated Hermes chief equity strategist Phil Orlando and Sarge986 president Stephen Guilfoyle discuss how many more rate hikes it will take to slow inflation on ‘The Claman Countdown.’
Citigroup economists now expect the Federal Reserve to approve a historic, 100-basis point interest rate hike when policymakers meet at the end of the month following the hotter-than-expected June inflation report.
"In June the committee showed it would react to each monthly inflation reading," Citigroup economists led by Andrew Hollenhorst wrote in a note to clients. "We now expect the Fed to deliver a 100 basis-point rate hike at the meeting later this month."
That would be the first rate hike of its size since the Fed started announcing moves in the overnight federal funds rate in 1994 and would put the benchmark range between 2.5% and 2.75%.
Investors lifted their expectations of a mega-sized rate hike following the scorching-hot Labor Department report released Wednesday, which showed the consumer price index rose 9.1% in June from a year ago, exceeding market expectations. It marks the fastest pace of inflation since December 1981. Wall Street is now penciling in a 28% chance of a mega-sized rate hike at the Fed's July 26-27 meeting, according to the CME Group's FedWatch tool.
INFLATION TIMELINE: MAPPING THE BIDEN ADMIN'S RESPONSE TO RAPID PRICE GROWTH