The US Federal Reserve will need to take tougher action than expected to root out inflation, according to a majority of leading academic economists polled by the Financial Times, who predict at least two more quarter-point interest rate increases this year.
The latest survey, conducted in partnership with the Kent A Clark Center for Global Markets at the University of Chicago Booth School of Business, predicts the Fed will lift its benchmark rate to at least 5.5 per cent this year. Fed funds futures markets suggest traders favour just one more quarter-point rate rise in July.
Top Fed officials have signalled a preference for forgoing a rate rise at their next two-day meeting on Tuesday, while keeping the door ajar to further tightening. After 10 consecutive increases since March 2022, the federal funds rate now hovers between 5 per cent and 5.25 per cent, the highest level since mid-2007.