‘Markets are going to get rocked’ as Fed is likely to push rates higher, economist warns
The Federal Reserve is likely to raise interest rates more than the markets now expect, says Ricardo Reis, an economist at the London School of Economics.
“Markets are going to get rocked,” Reis said on the sidelines of the American Economic Association annual meeting in New Orleans on Saturday.
“All the risks are on the upside. A rate of 5.5% is the minimum,” he added.
Last month the Fed raised the top end of its benchmark rate range to 4.5%. The central bank penciled in a 5.25% terminal rate.
Investors who trade in the fed-funds futures market now expect the Fed to stop raising when rates get to 5%.
The Fed is burned by failing to recognize the persistent upward move of inflation in 2021.
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