Derby’s Take: Fed May Seek to Tamp Down Talk of Very Aggressive Rate Rises

Several Fed officials have cast doubt on need for 75 basis point rate increase

Federal Reserve Chairman Jerome Powell indicated last month that the central bank was likely to raise interest rates by a half percentage point at its meeting in May. Photo: Samuel Corum/Getty Images

While the Federal Reserve will certainly step up its rate rise campaign Wednesday, analysts don’t expect the central bank to really swing hard at surging inflation with a three quarter percentage point interest rate increase, and anticipate the Fed will try to tamp down on speculation of such a move at future policy meetings.

For now, there is a broad consensus among forecasters that this week’s Federal Open Market Committee meeting will conclude with a half percentage point increase to the federal-funds target rate range to between 0.75% and 1%. The Fed is also nearly certain to announce a plan to shrink its $9 trillion balance sheet, as part of a two-pronged effort to lower levels of inflation that all of the central bank’s officials consider unacceptably high.

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