Berliner Boersenzeitung - Resurging US inflation puts Fed on track for more big rate hikes

EUR -
AED 4.000343
AFN 77.204987
ALL 100.234543
AMD 422.542664
ANG 1.96341
AOA 950.396427
ARS 1004.958841
AUD 1.618053
AWG 1.960944
AZN 1.850912
BAM 1.954895
BBD 2.199602
BDT 128.01077
BGN 1.957143
BHD 0.41057
BIF 3136.677486
BMD 1.089111
BND 1.463936
BOB 7.527586
BRL 5.909301
BSD 1.089406
BTN 91.042411
BWP 14.722323
BYN 3.565183
BYR 21346.577117
BZD 2.195904
CAD 1.4898
CDF 3093.075373
CHF 0.974425
CLF 0.03593
CLP 991.428618
CNY 7.908799
CNH 7.937486
COP 4337.929421
CRC 570.24139
CUC 1.089111
CUP 28.861444
CVE 110.214005
CZK 25.319677
DJF 193.556888
DKK 7.458821
DOP 64.380803
DZD 146.462387
EGP 52.325812
ERN 16.336666
ETB 62.945853
FJD 2.430623
FKP 0.839226
GBP 0.840303
GEL 2.956945
GGP 0.839226
GHS 16.831135
GIP 0.839226
GMD 73.814474
GNF 9382.658722
GTQ 8.448169
GYD 227.886311
HKD 8.503709
HNL 26.983515
HRK 7.523525
HTG 143.804783
HUF 392.101398
IDR 17613.104344
ILS 3.947243
IMP 0.839226
INR 90.990763
IQD 1427.152772
IRR 45851.576226
ISK 149.306721
JEP 0.839226
JMD 170.151272
JOD 0.771852
JPY 172.554945
KES 141.58426
KGS 92.82755
KHR 4472.909887
KMF 492.332799
KPW 980.200351
KRW 1507.460552
KWD 0.332953
KYD 0.907888
KZT 517.705216
LAK 24134.054969
LBP 97560.755238
LKR 330.530101
LRD 212.433659
LSL 19.726673
LTL 3.215862
LVL 0.658792
LYD 5.265612
MAD 10.702346
MDL 19.29325
MGA 4896.779262
MKD 61.520542
MMK 3537.390296
MNT 3757.433594
MOP 8.756909
MRU 43.11805
MUR 50.754619
MVR 16.775081
MWK 1889.060637
MXN 19.232803
MYR 5.092693
MZN 69.594188
NAD 19.726854
NGN 1763.118424
NIO 40.101813
NOK 11.77622
NPR 145.665933
NZD 1.801434
OMR 0.41927
PAB 1.089406
PEN 4.054161
PGK 4.264066
PHP 63.591031
PKR 303.481268
PLN 4.285263
PYG 8233.190572
QAR 3.971962
RON 4.96874
RSD 117.041297
RUB 96.277831
RWF 1426.553044
SAR 4.084867
SBD 9.211271
SCR 15.137903
SDG 654.556009
SEK 11.554478
SGD 1.464446
SHP 0.839226
SLE 24.883251
SLL 22838.118729
SOS 622.617637
SRD 32.34009
STD 22542.400396
SVC 9.532589
SYP 2736.424658
SZL 19.720057
THB 39.229434
TJS 11.602245
TMT 3.82278
TND 3.365443
TOP 2.567634
TRY 35.996041
TTD 7.396646
TWD 35.528436
TZS 2891.58982
UAH 44.984199
UGX 4025.174544
USD 1.089111
UYU 43.709776
UZS 13734.645095
VEF 3945362.093765
VES 39.703361
VND 27641.639145
VUV 129.301486
WST 3.053441
XAF 655.650626
XAG 0.03481
XAU 0.000442
XCD 2.943377
XDR 0.821727
XOF 655.653635
XPF 119.331742
YER 272.631766
ZAR 19.655907
ZMK 9803.306077
ZMW 28.188216
ZWL 350.693323
  • CMSC

    0.0290

    24.439

    +0.12%

  • RIO

    -1.2500

    66.3

    -1.89%

  • SCS

    0.2350

    13.765

    +1.71%

  • AZN

    0.4550

    78.575

    +0.58%

  • RBGPF

    0.0000

    56.9

    0%

  • BCC

    10.6500

    136.87

    +7.78%

  • BP

    -0.1900

    34.84

    -0.55%

  • RELX

    0.3550

    46.345

    +0.77%

  • NGG

    0.1700

    60.98

    +0.28%

  • CMSD

    -0.0150

    24.555

    -0.06%

  • GSK

    0.2700

    38.94

    +0.69%

  • BTI

    -0.0450

    32.155

    -0.14%

  • RYCEF

    0.1100

    5.92

    +1.86%

  • BCE

    0.1900

    32.89

    +0.58%

  • JRI

    0.0500

    12.62

    +0.4%

  • VOD

    -0.0100

    9.02

    -0.11%

Resurging US inflation puts Fed on track for more big rate hikes
Resurging US inflation puts Fed on track for more big rate hikes / Photo: SAUL LOEB - AFP/File

Resurging US inflation puts Fed on track for more big rate hikes

Red-hot US inflation is showing few signs of cooling, putting the Federal Reserve on track to continue its aggressive interest rate increases to help cool high prices that are challenging Joe Biden's presidency.

Text size:

The hoped-for signs of relief for American families did not materialize in May as consumer prices hit a new four-decade high, rising 8.6 percent and topping what economists thought was the peak in March.

With Russia's war on Ukraine continuing to pressure global fuel and food prices, and amid ongoing supply chain uncertainties due to Covid-19 lockdowns in Asia, analysts now say the expected easing of inflationary pressures will take much longer to materialize.

The US central bank already had signaled plans for more big increases in the benchmark borrowing rate this week and next month, but chances are rising that the Fed might have to be even more aggressive -- which increases the risk the economy might tip into a recession.

The latest inflation report -- the last major data point before the Fed's policy meeting Tuesday and Wednesday -- also douses hopes central bankers will be able to call a ceasefire in September ahead of key congressional elections, where Biden's Democrats are widely expected to suffer damaging losses.

Prices continued to rise last month for a range of goods, including housing, groceries, airline fares and used and new vehicles, setting new records in multiple categories, according to the Labor Department data.

Energy has soared 34.6 percent over the past year, the fastest since September 2005, while food jumped 10.1 percent, and the cost of fuel oil more than doubled, jumping 106.7 percent, the largest increase in the history of CPI, which dates to 1935.

The CPI surge "raises the probability of even more aggressive Fed rate hikes to tamp down on inflationary expectations," said Mickey Levy of Berenberg Capital Markets

If the policy-setting Federal Open Market Committee decides on a giant step -- three quarters of a point rather than the expected half-point increase -- it would be the first 75 basis point rate hike since November 1994.

Diane Swonk of Grant Thornton indicated such a move is possible.

"They are behind the curve and eager to catch up," she said on Twitter. "Fed has to reduce demand to meet a supply-constrained world. Ugly in many ways."

Economists at Barclays are now calling for a 0.75-point increase, though Ryan Sweet at Moody's says chances are low, and Karl Haeling at LBBW expects three more half-point hikes.

- Political considerations? -

Biden is facing growing political backlash as high prices increase the pain for American families, who are seeing daily records at the gas pump and higher grocery bills due to the fallout from Russian leader Vladimir Putin's invasion of Ukraine.

Unlike his predecessor Donald Trump, who relentlessly attacked the Fed and its chair Jerome Powell, Biden has publicly endorsed the central bank's efforts.

Biden, who blames "Putin's Price Hike" for the acceleration in inflation, said Washington "must do more -- and quickly -- to get prices down here in the United States."

Hoping to avoid a devastating setback in November elections that could return control of the legislature to opposition Republicans, Biden has urged Congress to approve legislation to bring down costs of key products such as medicines and services such as shipping to soften the blow for US consumers.

Some analysts had speculated that Powell might call for a timeout in the interest rate moves at the FOMC's September meeting, but economist Levy echoed the prevailing view that a pause in rate hikes is now "looking increasingly unlikely."

Powell has always insisted that central bankers eschew political considerations and focus on what's best for the economy.

The Fed, which has already acknowledged that slowing demand will entail some pain, is hoping to cool price pressures without choking off economic growth -- but that is looking increasingly difficult.

Gita Gopinath, the number two at the International Monetary Fund, last week said US central bankers are treading an "incredibly narrow path" to achieve a soft landing and avoid a sharp increase in unemployment.

"It will be a real challenge to bring down inflation... without turbulence," she said at a Financial Times conference, adding that it could "require much steeper increases in rates."

(H.Schneide--BBZ)