Analyst: The conditions for the Federal Reserve to raise interest rates are not yet ripe, but the reasons are accumulating.

robot
Abstract generation in progress
Golden Finance reported that on June 18, Federal Reserve officials hinted on Wednesday that they may soon need to raise interest rates rather than cut them, amid rapidly rising inflation—a sharp shift in thinking. Evercore ISI analyst Krishna Guhar said that easing energy prices could bring some relief in the coming months. But he warned that the interest-rate outlook has already decoupled from oil prices, suggesting deeper uncertainty over whether potential inflation will cool enough that the Fed ultimately doesn’t have to raise rates. Guhar said that, aside from energy, two additional pressures remain: the ongoing pass-through effects of tariffs and cost spillovers stemming from the investment boom in artificial intelligence infrastructure. Claudia Sam, chief economist at New Century Advisors and a former Fed economist, said that there are currently no conditions typically prompting the Fed to respond to supply-driven inflation—such as an overheated labor market or unanchored inflation expectations. But she acknowledged that the case for action is building. “I can understand this view that the Fed should be prepared—if things worsen, step in and raise rates,” she said. The Fed’s pace of action may be faster than during the inflation surge in the pandemic because “they are already having this debate.” (Jin10)
View Original
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • Comment
  • Repost
  • Share
Comment
Add a comment
Add a comment
No comments
  • Pinned