By Andrey Dashkov, analyst, Casey Research
Interest rates are about to go up higher and faster than many investors think.
The Fed has released its June meeting notes, and they suggest that hikes are far from over. In fact, future hikes could be on the higher side: 0.75 percentage points and more.
That’s because the Fed is behind the curve. Its original prediction that inflation is transitory has clearly been wrong.
In May, annual inflation reached 8.6%. Some components of the Consumer Price Index soared much more, however. Food became 10.1% more expensive compared to May 2021, while the energy index rose 34.6% year-over-year.
What’s more, the Fed has changed the narrative around inflation and how it plans to deal with it. The Fed now wants to pacify the market and do whatever is necessary to bring down inflation.
Even if it means higher and faster interest rate hikes.