“Federal Reserve microphone” Nick Timiraos recently wrote that investors have basically decided that the Federal Reserve will raise interest rates for the first time in three years next week. The more difficult question is what will happen later. Since almost no one within the Federal Reserve thinks that a single interest rate hike of 25 basis points is enough to lower inflation, if it decides to raise interest rates next week, it reflects the judgment that interest rates were previously at the wrong level, and a single rate hike cannot solve the problem. The Federal Reserve has only raised interest rates once since the 1990s. In July, Walsh said he didn't think the Federal Reserve was good at “fine-tuning”. Analysts said that a chairman who is skeptical about fine-tuning is unlikely to announce the completion of the task after raising interest rates by 25 basis points. Walsh said last month that there isn't much evidence that borrowing conditions are limiting economic activity. If interest rate hikes are promoted for this reason, the market will naturally ask how high interest rates need to be raised. In the absence of an explanation, the market may interpret a rate hike as the beginning of a larger scale action. As a result, investors this week are no longer treating the September meeting as a matter of a single meeting. The market currently expects the cumulative number of interest rate hikes to reach at least three times by June next year, which is higher than the two previously anticipated.

“Federal Reserve microphone” Nick Timiraos recently wrote that investors have basically decided that the Federal Reserve will raise interest rates for the first time in three years next week. The more difficult question is what will happen later. Since almost no one within the Federal Reserve thinks that a single interest rate hike of 25 basis points is enough to lower inflation, if it decides to raise interest rates next week, it reflects the judgment that interest rates were previously at the wrong level, and a single rate hike cannot solve the problem. The Federal Reserve has only raised interest rates once since the 1990s. In July, Walsh said he didn't think the Federal Reserve was good at “fine-tuning”. Analysts said that a chairman who is skeptical about fine-tuning is unlikely to announce the completion of the task after raising interest rates by 25 basis points. Walsh said last month that there isn't much evidence that borrowing conditions are limiting economic activity. If interest rate hikes are promoted for this reason, the market will naturally ask how high interest rates need to be raised. In the absence of an explanation, the market may interpret a rate hike as the beginning of a larger scale action. As a result, investors this week are no longer treating the September meeting as a matter of a single meeting. The market currently expects the cumulative number of interest rate hikes to reach at least three times by June next year, which is higher than the two previously anticipated.