The market’s expectations for future rate hikes may be too high.
Currently, the market expects the U.S. Federal Reserve to raise rates four times over the next year, by 25 basis points each time, bringing the rate to about 4.6%. Rising energy prices have sparked concerns about inflation.
Traders also expect the European Central Bank to reach 3.25% and the Bank of England to reach 4.75%.
A Reuters view analysis suggests that market expectations may already be excessive, since potential inflation remains relatively manageable, and high energy prices are more likely to weaken economic growth than trigger persistent inflation.
Currently, the market expects the U.S. Federal Reserve to raise rates four times over the next year, by 25 basis points each time, bringing the rate to about 4.6%. Rising energy prices have sparked concerns about inflation.
Traders also expect the European Central Bank to reach 3.25% and the Bank of England to reach 4.75%.
A Reuters view analysis suggests that market expectations may already be excessive, since potential inflation remains relatively manageable, and high energy prices are more likely to weaken economic growth than trigger persistent inflation.