The movement comes with a signal from the leaders Federal Reserve (Fed, US central bank) will do whatever it takes to get the country’s inflation back on track. The BofA said the “50 is the new 25”, indicating future monetary interest rate hikes.
Last week, the central bank raised US policy rates, Fed funds for the first time since 2018 and signaled an aggressive stance to control inflation.
City now expect the Fed to raise 50 basis points at its May, June, July and September meetings and another 25 basis points at the final two meetings of the year scheduled for October and December. “If inflation rises unexpectedly, the central bank could rise above 50 basis points (e.g. 75 basis points) at a single meeting,” Citi analysts said in a statement.
“We are surprised that Federal Reserve officials raised 50 basis points,” said BofA’s Mark Cabana, Ralph Axel, Megan Schweiber and Bruno Brysinha.
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