Beautiful Virgin Islands

Tuesday, Jun 24, 2025

Inflation is soaring. Should the Fed unleash 'shock and awe'?

Inflation is soaring. Should the Fed unleash 'shock and awe'?

The Bank of England has already started to raise interest rates to fight inflation. The Federal Reserve is likely to follow soon. But how aggressive will America's central bank be?

Investors will be looking for clues when chair Jerome Powell holds a press conference after the Fed's meeting on Wednesday. Investors are not expecting the Fed to make a move this week. That's more likely to happen in March.

It would be the first time the Fed has changed interest rates since slashing them to near zero at the beginning of the 1Covid1-19 pandemic in March 2020. The central bank hasn't hiked rates since December 2018.

Higher interest rates make it more expensive for most people and companies to borrow money. That, in turn, leads to a slowdown in consumer and business spending, which usually puts a lid on rising prices.

Most on Wall Street think the Fed will want to take a slow and steady approach to combating higher consumer prices. Raising rates too sharply could hurt the economy and lead to further turmoil in a suddenly skittish stock market.

Chicago Mercantile Exchange data shows that the market is pricing in an 88% chance of a quarter-point interest rate increase at the Fed's March 16 meeting.

But a small faction of traders believe the Fed will raise rates more aggressively. Investors are pricing in a 5% probability that the Fed will boost rates by a half-point. (The remaining 7% believe the Fed will sit tight.)

Hedge fund manager Bill Ackman tweeted earlier this month that a half-point hike by the Fed could help "restore its credibility" as an inflation fighter since it would be a "surprise move to shock and awe the market, which would demonstrate its resolve on inflation."

"The Fed is losing the inflation battle and is behind where it needs to be, with painful economic consequences for the most vulnerable," Ackman added.

Even some bankers are starting to think that the Fed could start with a big rate hike.

Bruce Van Saun, CEO of New England-based regional bank Citizens Financial Group (CFG), told CNN Business that he's hearing more chatter about a half-point hike.

Van Saun noted that even though that's not really priced into the market just yet, the Fed may want to act more quickly to tamp down further inflation pressures.

Still, most market participants think that the Fed can show that it is serious about fighting inflation with smaller rate hikes.

"We think it is unlikely the central bank will open the possibility of a [half-point] hike in March. We would regard more frequent hikes as the most likely risk," said Luigi Speranza, chief global economist with BNP Paribas, in a report.

That's exactly what JPMorgan Chase (JPM) CEO Jamie Dimon expects to happen. Dimon told analysts on the bank's earnings conference call earlier this month that there is "a pretty good chance there will be more than four" rate hikes this year — and potentially as many as six or seven.

"This whole notion that somehow it's going to be sweet and gentle and no one is ever going to be surprised ... I think it's a mistake," Dimon said about the current expectations of slow, gradual and telegraphed rate hikes.

Get ready for tech earnings


Stocks have been volatile during the first part of earnings season. JPMorgan Chase, Goldman Sachs (GS) and other big banks haven't lived up to the considerable expectations that investors had for their results.

But now it's time for the tech sector, which has been leading the market for the past few years, to take center stage.

Investors will get a read on demand for cloud computing from the likes of IBM (IBM) and Microsoft (MSFT).

Chip leader Intel (INTC), which has rallied this year despite lingering concerns about semiconductor supply chain issues, is also on tap to report earnings. So are Elon Musk's Tesla (TSLA) and the world's most value company, iPhone maker Apple (AAPL).

Expectations are high. Wall Street still adores tech stocks, even though the sector and the overall Nasdaq recently fell into correction mode, down more than 10% from record highs.

According to data from FactSet Research, 62% of the ratings by Wall Street analysts of tech and communications firms in the S&P 500 are buy ratings.

Up next


Monday: Earnings from Philips (PHG), Halliburton (HAL) and IBM

Tuesday: US consumer confidence; Earnings from Ericsson (ERIC), Verizon (VZ), Johnson & Johnson (JNJ), GE (GE), Microsoft, Capital One (COF) and Texas Instruments (TXN)

Wednesday: US new home sales: Fed decision; Earnings from CNN parent company AT&T (T), Anthem (ANTM), Boeing (BA), Intel and Tesla

Thursday: US GDP for Q4; Earnings from Comcast (CMCSA), McDonald's (MCD), Mastercard (MA), Apple, Mondelez (MDLZ) and Visa (V)

Friday: US personal income and spending; Earnings from Chevron (CVX), Charter Communications (CHTR), Caterpillar (CAT) and Colgate-Palmolive (CL)

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Airlines Evaluate Flight Cancellations Amid Escalating US-Iran Tensions
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
×