The dismal May inflation report has some Wall Street economists betting that the Federal Reserve will raise interest rates by 75-basis points in June or July as policymakers try to tame runaway consumer prices.
A majority of traders are already pricing in an 80% chance of a half-point rate increase during the Fed’s June meeting, according to the CME Group, which tracks trading.
In this Jan. 29, 2020, file photo, Federal Reserve Chair Jerome Powell pauses during a news conference in Washington. (AP Photo/Manuel Balce Ceneta, File / AP Newsroom)
The new projections come on the heels of a scorching hot Labor Department report that showed the consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rents, rose 8.6% in May from a year ago, faster than expected. Prices jumped 1% in the one-month period from April.