"We think there’s a reasonable chance that the Fed will have
to bring the Fed Funds rate to 6%, and then keep it there for an
extended period to slow the economy and get inflation down to
near 2%," Rieder said in a note on Tuesday.
The Fed's policy rate is currently in the 4.50%-4.75% range.
As of December, officials saw that rate rising to a peak of
around 5.1%, a level investors expect may move at least half a
percentage point higher now.
Goldman Sachs said in a note on Tuesday that it had raised
its forecast for the so-called terminal rate by 25 basis points
to a range of 5.5%-5.75%.
Bets on the Federal Reserve more aggressively hiking rates
have gained more traction in money markets in recent weeks,
after a string of economic data showing a tight job market and
inflation remaining high. That data revived fears the Fed may
resort once again to the same super-sized interest rate hikes
that hammered stocks and bonds last year.
Traders had largely expected the central bank to raise rates
by 25 basis points at its next rate-setting meeting on March 21
to 22, but after Powell's remarks on Tuesday Fed funds futures
were pricing in a 50 basis points hike, CME Group data showed.
(Reporting by Davide Barbuscia; Editing by Anna Driver)
By Davide Barbuscia
NEW YORK, March 7 (Reuters) - The U.S. Federal Reserve
could raise interest rates to 6% and keep them there for an
extended period of time to fight inflation, said Rick Rieder,
chief investment officer of global fixed income at BlackRock,
the world’s largest asset manager.
Federal Reserve Chair Jerome Powell told U.S. lawmakers on
Tuesday that the U.S. central bank could become more aggressive
in its rate hike path following recent strong economic data.
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