Barclays for Fed: ‘It may surprise markets with more aggressive interest rate hikes next week’

Barclays economists estimate that the US Federal Reserve may raise interest rates by 75 basis points at the monetary policy meeting on June 14-15.

In the wake of the announcement of inflation data, which climbed to a new high of 40 years, Barclays analysts do not share the market expectation of an increase in interest rates by 50 basis points. next week, noting that “the Federal Reserve now has reason to surprise the markets with a more aggressive increase.”

Although “we understand that this is a decision that needs to be made in a very short time, it could still go ahead in June or July,” Barclays economists said in a statement following the release of Consumer Price Index data in May. .

Investors are worried that after the announcement of the new data on inflation – which showed a bigger increase than expected for May – that the US Federal Reserve will have to continue to press the “brake” to tame the inflation rally.

In particular, o US inflation in May climbed on new high 40 yearsraising the chances of the Federal Reserve launching more aggressive interest rate hikes in the coming months in a bid to curb prices.

THE consumer price index increased by 8.6% compared to a year earlier, after rising 8.3% last month, according to the US Department of Commerce. This is the highest level of inflation since 1981.

From last month, the index increased by 1%exceeding analysts’ estimates that expected it to increase by 0.7% according to a Wall Street Journal poll.

THE structural indicatorexcluding energy and food, rose 0.6% month-on-month and 6% year-on-year, slowing slightly from 6.2% the previous month.

Wall Street is sinking in the wake of this data, with the Dow losing more than 700 points, while with losses of more than 2.5%, the S&P 500 and Nasdaq are moving.