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US Fed Meeting Preview | Containing inflation top priority, 75 bps hike in interest rates likely

The Fed is under pressure to quickly take its policy rate to the neutral level that neither stimulates nor restricts - and beyond.

June 15, 2022 / 01:56 PM IST
US Federal Reserve| Representative Image

US Federal Reserve| Representative Image

Global stock markets have been in a volatile phase with a negative bias for quite some time now, given the unfavourable economic and non-economic factors. The Russia–Ukraine crisis doesn’t seem like abating soon which is resulting in elevated fuel, food and commodity prices. The markets which gained some comfort with the opening up of the Chinese economy was in for some more shock with the outbreak of a fresh Covid wave in Beijing.

A rising inflation world wide has become the bone of contention for the central banks and economists across geographies. All emphasis is now being laid to control inflation for which the central banks have become more hawkish in their approach, and efforts to stem economic growth have gone somewhat on a backfoot.

The Federal Reserve in its last meeting had decided to raise rates and maintained its hawkish stance. US Fed Chairman Jerome Powell had signalled that the Fed’s policymaking committee expected to implement 0.5 percent increases at its next two meetings, but was not “actively considering” a more aggressive 0.75 percent increase.

The annual pace of consumer price inflation in the US hit 8.6 percent in May as energy and food costs surged. US Treasuries have jumped since the start of April and is above the 3 percent mark.