Last week it became known that inflation in the United States exceeded 9% in June. The result to the sixth month of the year has kept the market on the lookout due to the fact that the Federal Reserve (FED) would increase the interest rate between 75 and 100 points to contain inflationary pressure.
In that sense, economists at Citigroup Inc. believe that it is most likely that the Federal Reserve will implement an increase in interest rates of 100 basis points when its members meet at the end of July.
“The committee showed in June that it would be willing to react to every monthly inflation reading,” Citigroup economists led by Andrew Hollenhorst said in a note to clients on Thursday. “We now expect the Fed to raise rates by 100 basis points at the meeting later this month,” they added.
At its previous meeting, held early last month, the Fed raised rates by 75 basis points, although it reversed course in the days leading up to the meeting (from an expected 50 basis point move), prompted by high inflation figures at the time.
FED inflation expectations index advances
A broad gauge of inflation expectations, which has been highlighted by Federal Reserve Chairman Jerome Powell, saw a record 2.19% penalty in the second quarter versus 2.17% in the first quarter, according to data published on Thursday. Friday on the Central Bank website.
Developed by FED board economists in late 2020, the Index of Common Inflation Expectations comprises more than 20 indicators that measure the attitudes of consumers, investors, and professional forecasters toward future price increases.
The index has posted steadily since the end of 2020. The latest reading was the highest on records dating back to 1999.
With information from Bloomberg.