The Federal Reserve may find it hard to slow down from its super-sized interest rate hikes if ugly inflation data persists.
When the Federal Reserve started to raise its benchmark policy interest rate by super-sized 0.75 percentage points in June this year, a few Fed officials and private sector economists talked about how it might be difficult for the central bank to slow down from that pace of increases.
This conundrum has risen to the forefront in the wake of Thursday’s higher-than-expected U.S. consumer price inflation report for September. “The FOMC was probably already pretty much locked in to a 75 basis point rate hike at the next meeting on November 2, but if there was any doubt, this should resolve it,” said Stephen Stanley, chief economist at Amherst Pierpont.
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