Breaking the "Nine" in inflation may cause the Federal Reserve to further radiate interest rate hikes

Xinhua News Agency, Washington, July 13th (International Observation) Breaking the "Nine" may cause the Federal Reserve to further radical interest rate hikes

Xinhua News Agency reporter Xiong Maoling Xuyuan

According to data released by the US Department of Labor on the 13th, the US Consumer Price Index (CPI) increased by 9.1%year -on -year in June this year, an increase of nearly 41 years. Analysts said that the continuous high inflation will strengthen the market's expectations of the US Federal Reserve Commission to further raise interest rates, and this radical monetary policy may exacerbate the risk of US economic recession.

According to the latest data from the Ministry of Labor, due to the continued rising energy, food prices and residential costs, the year -on -year and year -on -year increase in the US CPI in the United States expanded significantly compared with May. Specifically, energy prices rose 7.5%month -on -month and rose sharply by 41.6%year -on -year. In the month, food prices increased by 1%month -on -month, up 10.4%year -on -year. The residence cost of about one -third of the proportion of CPI increased by 0.6%month -on -month, an increase of 5.6%year -on -year.

On June 13, 2022, pedestrians walked through the New York Stock Exchange Building. (Shin of Xinhua News Agency, Photo by Guo Ke)

After more than 8%for three consecutive months, CPI increased its market expectations again year -on -year. Many US media and economists blame the high inflation on the situation of the White House and the Federal Reserve's misunderstanding. It has implemented excessive fiscal stimulus and loose monetary policy, and the market changes are slow. In addition, factors such as global energy prices and commodity prices caused by geopolitics, and the rebound of global epidemic caused by the continuous interruption of the supply chain.

Looking forward to the short -term trend, the economist of the American Institute of Enterprise Desmond Rachman told Xinhua News Agency that with the price of commodities such as crude oil, copper, wood, and wheat, American inflation may be seen in the short term. However, some experts expressed pessimism about this. BMO Capital Marketing Senior Economist Sal Guatier said in a report that gasoline prices have fallen, retail industry ushered in summer discount season or helps to suppress inflation, but the core inflation rate is still under pressure. It will not be seen for the time being, and may be "stubborn in a longer time than expected."

The Fed will hold a new monetary policy meeting from July 26th to 27th. Since March, the Federal Reserve has raised interest rates three times, raising the federal fund interest rate target range to 1.5%to 1.75%. At the Monetary Policy Conference in June, the Federal Reserve raised interest rate hikes 75 basis points, which was the largest single rate hike since 1994. As inflation breaks the "nine", the Fed will be radical again to become a market consensus.

On May 4, 2022, in Washington, the capital of the United States, the Interim Chairman of the Federal Reserve Board attended the press conference. (Photo by Liu Jie, a reporter from Xinhua News Agency)

Fed Chairman Powell previously stated that at the monetary policy conference in July, the Fed may decide to continue to raise interest rates 50 basis or 75 basis points, but from the current situation, many market participants have even exceeded the expectations of interest rate hikes even exceeding more 75 basis points.

Wells Fargo Securities analysts Sarah Hus and Michael Pogley believe that the Fed's raising 75 basis points again seems to be the "lower limit" of continuous price pressure, not the "upper limit". The Fed observation tools of the Chicago Commodity Exchange showed that on the 13th, the probability of traders expected the Federal Reserve to raise interest rates in July of 100%.

Rahman told reporters that inflation has repeatedly renewed high, which will almost cause the Fed to continue to implement a radical interest rate hike policy and significantly reduce the balance sheet. Faced with the weak trend of the US economy and financial markets, the Fed's monetary policy will inevitably increase the risk of "hard landing" and the "further turbulent" of the stock market and the bond market before the end of the year.

Robert Herler, who served as a director of the Federal Reserve in the 1980s, said in the latest article that the US economy has fallen into a technical recession for two consecutive quarters and will usher in a more serious second decline in early 2023. Deutsche Bank Economist also predicts that the US economy will fall into a decline in mid -2023, and the unemployment rate will reach a peak of 5.4%in the fourth quarter of 2023, which is significantly higher than the current level.

[Editor in charge: Zhou Chuqing]

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