The Fed Will Hike Far Higher Than Expected

The Fed Will Hike Far Higher Than Expected

The Fed is the key.

It is the key to:

  • The various markets
  • The economy

The key to the Fed is non farm payrolls and inflation. Right now, since the labor market is tight, the Fed is focused on inflation.

The chart shows the preferred inflation guage of the Fed. It hooked back up in the latest month. Why?

Raw materials and used car prices stopped going down and stick prices, like wages and rent, are still going higher. And this situation will remain with us for months. in other words, inflation is now on a slow increase path again. Not the sharp rise we had last year but a slow relentless rise.

Right now, the market is looking for a final rate of 5.25% and hit that peak in August. But I believe the market is wrong.

You may expect a continuation of rate hikes, under pressure from the inflation figures, to peak over 6% sometime in 2024. We may even see 7%!

At that point, the economy will be in a ful recession and the Fed will shift to fighting unemployment.

But this year will be all Fed hikes for the whole year.

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