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Commentary
Last Wednesday, the Fed raised the key interest rate 0.25%, as expected, in a unanimous vote. The biggest surprise was that 16 FOMC members forecasted another key interest rate hike by the end of this year.
During his press conference, Fed Chairman Kevin Warsh said the FOMC vote “shows our resolve to achieve price stability on a timelier basis.” Warsh cited three developments that forged the unanimous vote, namely: (1) stronger economic growth, (2) insufficient improvement in inflation, and (3) increased geopolitical risks. This last point was key, since the prospect of more inflationary pressures from higher oil prices is clearly bothering the FOMC, as higher transport costs (e.g., diesel prices) fan fuel inflation….
Last Wednesday, the Fed raised the key interest rate 0.25%, as expected, in a unanimous vote. The biggest surprise was that 16 FOMC members forecasted another key interest rate hike by the end of this year.
During his press conference, Fed Chairman Kevin Warsh said the FOMC vote “shows our resolve to achieve price stability on a timelier basis.” Warsh cited three developments that forged the unanimous vote, namely: (1) stronger economic growth, (2) insufficient improvement in inflation, and (3) increased geopolitical risks. This last point was key, since the prospect of more inflationary pressures from higher oil prices is clearly bothering the FOMC, as higher transport costs (e.g., diesel prices) fan fuel inflation….
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