A JPMorgan economist anticipates the Fed to raise the benchmark rate by 75 basis points as global markets bleed.
The Federal Reserve of the United States is expected to raise the federal funds rate at its next meeting on Wednesday, according to JPMorgan economist Michael Feroli, who believes that growing inflation would lead the Fed to raise the rate by 75 basis points (bps).
According to CME Group data released last week, the market has priced in a 95 percent possibility of a 50 basis point rate hike in the United States this month. While some anticipate a hawkish Fed, others predict the central bank would respond dovishly if markets deteriorate.
The day was one of the bloodiest openings to the week in a long time, with major U.S. stock indices and cryptocurrency markets dropping considerably.
According to S&P Dow Jones Indices, the “S&P 500 is officially in an official bear market,” according to CNBC’s Scott Schnipper.
Precious metals such as gold and silver have also lost value, with gold’s price per ounce falling 2.67 percent and silver’s price falling 3.58 percent.
On Monday, the entire crypto economy lost 18 percent of its value, and BTC fell below $21,000. All eyes are currently on the Federal Open Market Committee (FOMC) meeting, which is expected to hike the federal funds rate.
Increases of 25 to 50 basis points are considered moderate. The Fed could raise rates by 75 to 100 basis points at its upcoming meeting, with some forecasting 75 basis points.
According to CME Group statistics released last week, the market has priced in a 95 percent possibility of the Fed raising the benchmark rate by 50 basis points.
However, JPMorgan economist Michael Feroli believes a 75 basis point increase is likely, with a 100 basis point increase still plausible.
In a note to clients on Monday, Feroli predicted that the Fed would raise the rate by 75 basis points on Wednesday due to a “startling jump in longer-term inflation expectations.” “One would question if the ultimate surprise would be a hike of 100 basis points, which we believe is a possibility.”