Article
“Fed Whisperer”: Pressure for Larger, More Frequent Rate Hikes Is Mounting
BlockBeats news,November 11, Nick Timiraos, chief economics correspondent for The Wall Street Journal and widely known as the “Fed Whisperer,” wrote in a recent article that the rebound in US inflation is disrupting the gradual pace of rate hikes the Federal Reserve had previously sought to maintain. Throughout October, Fed officials worked to dispel market expectations of rapid, consecutive rate hikes in the near term, but the latest data did not support that effort.
Data released Tuesday by the US Department of Labor showed that, in the October months through 3, the core consumer price index (CPI), which excludes food and energy prices, rose at an annualized rate of 3.7%, significantly faster than the July 3 months through 1.6%. The report further strengthened market expectations of a rate hike at the Fed’s December 8 to 9 meeting. The real debate has shifted from whether a rate hike is needed to how quickly monetary policy should be tightened.
The article said the Fed now faces choices: continue at the previously envisaged pace with to more rate hikes of 25 basis points each; or act more quickly, using consecutive rate hikes or even a single hike of 50 basis points to actively curb economic activity and inflation. On Tuesday, remarks from several Fed officials indicated that the latter possibility was receiving more attention.
The article said the central dilemma facing the Fed is now clear: inflation continues to spread, requiring the central bank to act more quickly; cooling AI investment and tightening financial conditions, however, increase the risk of overtightening. Whether the Fed opts at its December meeting for a single rate hike of 50 basis points or consecutive hikes of 25 basis points will be an important test of its policy choices.