Traders boosted bets on Wednesday the Federal Reserve could deliver an even bigger interest-rate hike at its policy meeting later this month after the latest government data showed inflation, already at a 40-year high, accelerating further. A bevy of central bankers over the past couple of weeks have already signaled support for a 75 basis point rate increase at their upcoming policy meeting on July 26-27, following a similar-size hike at their last meeting in June.
Those price pressures are stoking concern that if the Fed does not begin to get inflation in check soon, business and consumer expectations of a torrid rate of future price increases could become entrenched, forcing the Fed to move even more aggressively. “It really pushes the Fed even further into the corner they’ve been operating in. They need to raise rates quickly and they need to raise rates by large amounts,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.