Five. Count em—five. Five different Federal Reserve officials in recent days pointed to rising inflation expectations as a potential economic drag well before actual inflation takes hold. The frequency of its mention leaves inflation the buzzword that could cause a Fed-induced market selloff when Janet Yellen takes the microphone in New York on Tuesday.
In only one day, the market-implied probability of an April interest-rate hike doubled, after St. Louis Fed President James Bullard said last Wednesday that inflation would overshoot the Fed’s 2% target. Other officials echoed his sentiment, sparking some Wall Street jitters that an aggressive Fed could move too fast for the comfort of growth-focused American corporations or that a Fed in catch-up mode had actually waited too long to take back aggressive accommodation.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Craig Erlam
Latest posts by Craig Erlam (see all)
- OANDA Market Insights podcast (episode 53) - 02/22/2019
- All Eyes on Washington - 02/22/2019
- Markets flat on final day of the week - 02/22/2019