Federal Reserve interest rate | Traders bet that Waller will raise rates before the end of this year

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Warsh (Kevin Warsh) was sworn in as Federal Reserve Chair on Friday. Bond traders firmly believe that Warsh will have to act quickly to curb inflation, and the bond market has fully priced in expectations of a bottom to this year's Fed rate hikes.

Additionally, Federal Reserve Governor Christopher Waller stated that the Fed should remove the phrase "accommodative stance" from its policy statement, paving the way for possible future rate hikes. Waller supports the clear communication that the Fed's next move could be either rate hikes or cuts.

After Waller's comments, traders further increased their bets on rising interest rates. The interest rate swap market indicates that by the end of this year, the Fed's benchmark rate is expected to be at least 0.25 percentage points higher than the current level.

John Briggs, head of US interest rate strategy at Natixis North America, said Waller's remarks show that he currently does not support rate hikes, and considering inflation risks, rate cuts are not appropriate. Waller may be the most influential member of the Federal Open Market Committee (FOMC) at the moment.

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