Credibility was Likely Main Motivation for Fed Rate Hike This Time

Dow Jones
3小時前

0233 GMT - The main motivation behind the Fed's decision to hike rates this time was credibility, given bond market pricing and recent developments in oil markets, says Christian Scherrmann, DWS Chief U.S. Economist. If U.S. inflation doesn't cool down in coming quarters, one or two rate hikes by the Fed may not suffice. One or two rate hikes will also likely not solve problems caused by external shocks, such as rising oil prices and renewed uncertainty from tariffs, Scherrmann says in a note. Nevertheless, there are good reasons to believe that inflation will trend lower and that tightening to the point where domestic demand slows will be unnecessary, Scherrmann adds.

 

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