Jumbo Fed rate-hike warning sends shock waves after inflation surprise

Résumé détaillé

And those rate hikes could be massive if inflation continues to broaden away from supply shocks and into other sectors, as shown in the hotter-than-expected October Consumer Price…

Gasoline prices may be easing, but American households are still paying more for groceries, healthcare, and other everyday expenses.

Now, a hotter-than-expected October inflation report has put a potentially much bigger Federal Reserve interest-rate increase on your kitchen table just in time for the holidays.

Fed Governor Christopher Waller said a 50-basis-point (0.5%) rate hike should be considered at the December policymaking meeting.

And Dallas Fed President Lorie Logan also warned that Fed officials may need to move faster and deliver at least two additional increases beginning next month to get inflation under control.

For Fed Chair Kevin Warsh, the stakes are growing. Six months into his leadership, the U.S. central bank's credibility as an inflation fighter is facing a major test.

Following months of waiting for economic data to confirm what American consumers and businesses have known and experienced firsthand — that prices are simply too damn high — the Fed heads into its final meeting of the year Dec. 8-9.

In light of political and economic pressures, it faces a stark choice: increase short-term interest rates to restore its anti-inflation credibility or risk letting price pressures spiral further out of reach.

"(The) Fed is losing its inflation-fighting credibility. Consumers who rely mostly on wages, not their stock portfolios, are paying the price,'' Diane Swonk, chief economist and managing director at KPMG, posted on LinkedIn.

And those rate hikes could be massive if inflation continues to broaden away from supply shocks and into other sectors, as shown in the hotter-than-expected October Consumer Price Index at 0.4%, up from the 0.3% estimate, CNBC reported.

Début de l'article, extrait de Yahoo Finance. Pour lire la suite, ouvrez l'article chez le média.