The Japan Times - Fed begins meeting with massive hike possible amid price surge

EUR -
AED 3.811675
AFN 76.644379
ALL 98.670318
AMD 414.153486
ANG 1.866371
AOA 949.040655
ARS 1093.67179
AUD 1.65249
AWG 1.864857
AZN 1.762713
BAM 1.954637
BBD 2.090935
BDT 126.294826
BGN 1.954854
BHD 0.391207
BIF 3065.445831
BMD 1.037772
BND 1.401452
BOB 7.155741
BRL 5.984731
BSD 1.035574
BTN 90.667906
BWP 14.393294
BYN 3.38905
BYR 20340.336924
BZD 2.080142
CAD 1.487735
CDF 2957.651048
CHF 0.941197
CLF 0.025971
CLP 996.095706
CNY 7.564007
CNH 7.569521
COP 4299.033986
CRC 526.98125
CUC 1.037772
CUP 27.500966
CVE 110.199407
CZK 25.096344
DJF 184.408459
DKK 7.45972
DOP 64.181179
DZD 140.267383
EGP 52.195381
ERN 15.566584
ETB 132.759699
FJD 2.397306
FKP 0.854696
GBP 0.833646
GEL 2.900537
GGP 0.854696
GHS 15.948507
GIP 0.854696
GMD 74.719796
GNF 8952.584931
GTQ 8.006234
GYD 216.661038
HKD 8.083229
HNL 26.390038
HRK 7.65829
HTG 135.458067
HUF 405.426588
IDR 16934.679593
ILS 3.689234
IMP 0.854696
INR 90.822666
IQD 1356.572926
IRR 43677.24129
ISK 146.595804
JEP 0.854696
JMD 163.740959
JOD 0.736197
JPY 157.916256
KES 133.949721
KGS 90.75314
KHR 4159.48409
KMF 492.53773
KPW 933.995178
KRW 1499.939009
KWD 0.320173
KYD 0.862974
KZT 532.055617
LAK 22508.277176
LBP 92736.707183
LKR 308.861694
LRD 206.089316
LSL 19.255161
LTL 3.064271
LVL 0.627738
LYD 5.085924
MAD 10.38282
MDL 19.381277
MGA 4888.043413
MKD 61.494619
MMK 3370.643923
MNT 3526.35036
MOP 8.304657
MRU 41.288424
MUR 48.469759
MVR 15.975901
MWK 1795.713843
MXN 21.279832
MYR 4.607185
MZN 66.314619
NAD 19.255161
NGN 1560.208
NIO 38.106951
NOK 11.642191
NPR 145.066255
NZD 1.829235
OMR 0.399569
PAB 1.035584
PEN 3.848709
PGK 4.220488
PHP 60.245279
PKR 289.032076
PLN 4.192544
PYG 8153.068527
QAR 3.775553
RON 4.976739
RSD 117.074191
RUB 100.503454
RWF 1440.728559
SAR 3.892277
SBD 8.762095
SCR 14.859469
SDG 623.70145
SEK 11.288114
SGD 1.402136
SHP 0.854696
SLE 23.770153
SLL 21761.565995
SOS 591.842018
SRD 36.432059
STD 21479.791191
SVC 9.061475
SYP 13493.115326
SZL 19.241362
THB 34.931935
TJS 11.303681
TMT 3.632203
TND 3.310729
TOP 2.43056
TRY 37.33542
TTD 7.031713
TWD 33.997936
TZS 2659.085996
UAH 42.936629
UGX 3805.734732
USD 1.037772
UYU 45.0836
UZS 13432.004935
VES 62.338387
VND 26266.016711
VUV 123.20641
WST 2.906621
XAF 655.560477
XAG 0.032165
XAU 0.000362
XCD 2.804632
XDR 0.79422
XOF 655.560477
XPF 119.331742
YER 258.405395
ZAR 19.11862
ZMK 9341.192269
ZMW 29.074414
ZWL 334.162255
  • RBGPF

    0.5100

    66.51

    +0.77%

  • JRI

    0.0200

    12.85

    +0.16%

  • SCS

    -0.2100

    11.37

    -1.85%

  • RIO

    0.7200

    62.91

    +1.14%

  • NGG

    -0.0400

    61.63

    -0.06%

  • CMSC

    -0.0600

    23.44

    -0.26%

  • BCC

    -1.2000

    123.91

    -0.97%

  • RELX

    -0.0500

    50.35

    -0.1%

  • CMSD

    0.0450

    23.875

    +0.19%

  • VOD

    0.1450

    8.585

    +1.69%

  • RYCEF

    -0.0600

    7.47

    -0.8%

  • BCE

    -0.9300

    22.59

    -4.12%

  • AZN

    0.1050

    72.465

    +0.14%

  • GSK

    0.0600

    36.44

    +0.16%

  • BP

    0.3700

    32.33

    +1.14%

  • BTI

    0.0890

    41.709

    +0.21%

Fed begins meeting with massive hike possible amid price surge
Fed begins meeting with massive hike possible amid price surge / Photo: OLIVIER DOULIERY - AFP/File

Fed begins meeting with massive hike possible amid price surge

US central bankers opened their two-day policy meeting Tuesday amid a blistering inflation surge that has ignited predictions the Federal Reserve will approve the biggest interest rate hike in more than 27 years.

Text size:

Fed Chair Jerome Powell has signaled that policymakers were poised to implement another half-point increase in the benchmark borrowing rate this week and another next month.

But a growing number of voices are now calling for a more aggressive three-quarter point hike in response to the big, unexpected jump in the consumer price index in May, which defied widespread expectations the data would show inflation pressures easing.

A Fed spokesperson confirmed the meeting of the policy-setting Federal Open Market Committee began as scheduled at 1500 GMT. Markets will get the rate decision on Wednesday at 1800 GMT.

Officials will debate how high to raise borrowing costs amid surging prices and fears of a bout of 1970s-style stagflation if their efforts to cool the economy clamp down on growth as well.

After dropping the rate to zero since March 2020 in a successful bid to help the world's largest economy avoid a devastating downturn and recover quickly from the impact of the Covid-19 pandemic, the Fed has raised rates twice, including a big, half-point increase last month.

Low lending rates and the boost from massive federal stimulus caused demand to outstrip supply amid global supply chain snarls, pushing prices higher, and the Russian invasion of Ukraine added more fuel to the inflation fires, sending food and fuel prices soaring.

- Credibility boost or negative surprise? -

Economists thought March was the peak of CPI, but the rate spiked in May, jumping 8.6 percent in the latest 12 months.

"Given the latest information on inflation, we believe that risk-management considerations call for aggressive action to reinforce the Fed's inflation-fighting credibility," Barclays analysts said in a commentary.

If policymakers decide on a giant step, it would be the first 75-basis-point increase since November 1994.

But other analysts say the massive step would be unnecessary and could be viewed as panicky, and instead project an additional half-point hike in September.

"With supply improving and demand for goods falling relative to services, margins will compress and inflation will fall much faster than markets and the Fed expect," Ian Shepherdson of Pantheon Macroeconomics said in an analysis.

He noted that many of the factors driving the price spikes are "outside the Fed's control, like oil prices."

The consensus remains for policymakers to stick to the plan, and central bankers are typically loath to surprise markets, although they insist their decisions are "data dependent" and will adjust to evolving situations.

Karl Haeling of LBBW said markets are pricing in at least one 75-basis-point increase in the next three meetings, but chances of that happening this week are "50-50."

"We believe they will probably avoid raising by 75 bps to reduce risk of an even bigger stock market plunge. But the coming barrage of Fed officials giving public comments after Wednesday will probably suggest that 75 bps is certainly possible at July's FOMC," he said.

Barclays said despite the element of surprise, "an aggressive move in June would provide the committee with the biggest bang for its buck, sending a resounding signal of the Fed's resolve to guide inflation back to its 2 percent target."

K.Tanaka--JT