JPMorgan Chase economists now see the Federal Reserve hiking interest rates nine consecutive times as central bank policymakers look to tackle hotter-than-expected inflation.
Federal Reserve Board Chair Jerome Powell testifies during Senate Banking, Housing, and Urban Affairs hearing on July 15, 2021, in Washington.
The possibility of an aggressive rate hike plan this year is also gaining traction among traders: According to the CME's FedWatch tool, a majority of traders are now pricing in a chance of an increase at every Fed meeting this year. Many Wall Street banks, including Goldman Sachs and Bank of America, also expect the Fed to raise rates seven times this year in order to quell rising inflation.
Minutes from the U.S. central bank's Jan. 25-26 meeting reinforced the belief that the Fed could chart a more aggressive course to normalize policy. Many policymakers said last month that current economic conditions could necessitate a quicker normalization of policy than in 2015, though they stressed that this outlook ultimately hinged on financial developments. The Fed kept rates ultra-low for years following the 2008 financial crisis, only raising them once at the end of 2015. Officials subsequently raised rates eight more times over a three-year period.
Although policymakers did not provide an exact timeline for the interest rate liftoff, they hinted it could take place during their meeting on March 15-16. The minutes reinforced that sentiment, with officials indicating they plan to raise rates "soon" and that they will begin reducing the $9 trillion balance sheet shortly thereafter.
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