FirstFT: US rates expected to rise further, economists warn

The Federal Reserve will have to take tougher-than-expected action to keep inflation in check, with at least two more quarters of rate hikes this year, according to a majority of leading academic economists surveyed by the Financial Times. expected to be expected.

The latest research, conducted in partnership with the Kent A. Clarke Global Market Center at the University of Chicago Booth School of Business, predicts the Fed’s forecast. The base rate will be raised to at least 5.5% this year.

The Federal Funds futures market suggests investors are in favor of raising the current range of 5-5.25% in July by one more quarter-point, the highest level since mid-2007. .

The findings were released ahead of the Federal Reserve’s latest interest rate meeting, which begins tomorrow. The US central bank is expected to pause its aggressive monetary policy tightening after its 10th consecutive rate hike since March 2022, leaving the door open for further tightening.

Of the 42 economists surveyed between June 5 and June 7, 67% expected the federal funds rate to peak this year between 5.5% and 6%. That percentage rose from 49% in the previous survey, which was conducted just days after a string of bank failures in March.

“We haven’t done enough to bring inflation down yet,” said Dean Croshore, a 14-year economist at the Fed’s Philadelphia Reserve Bank. “They are on the right track, but the road will be longer and winding than they thought.”

The latest inflation data will be released tomorrow. Annual core inflation, which excludes energy and food costs, rose 5.5% in April.

The Fed is expected to update its rate forecasts after its two-day meeting on Wednesday.

• Go deeper: Fed Board Consensus broken About how much US inflation will slow and how close the economy is to the brink.

• opinion: Unless tomorrow’s inflation data show significant weakness, the Fed’s proposed course of action to ‘skip’ a rate hike would end up being a confusing choice. Making future decisions more difficultsays Mohammed El-Erian.

• Let us know what you think: Do you think the Fed will raise rates once or twice for the rest of the year? Vote for the latest poll.

Other things I have my eye on today are:

• Nato: Secretary-General Jens Stoltenberg will visit U.S. President Joe Biden at the White House to discuss a military alliance summit in Vilnius, Lithuania next month, with the war in Ukraine on the top of the agenda.

• Economic data: The United States publishes federal budget balances.

• result: Software company Oracle reports financial results for the fourth quarter of the fiscal year.

5 more top stories

1. UBS executives have created a list of some 20 “red lines” that prohibit various activities of Credit Suisse employees. After completing the acquisition of a struggling rival earlier today. “We will never compromise on UBS’s strong culture, conservative risk approach and quality service,” the bank’s chairman and CEO said in an open letter marking the acquisition.

2. Former Italian Prime Minister Silvio Berlusconi, billionaire media mogul turned populist trailblazer, has died at the age of 86. Berlusconi is Italy’s longest-serving prime minister since the end of the war, serving nearly a decade in office during a period marked by criminal investigations into his business problems and sexual scandals.Read more about politicians Who provided the template for today’s populist.

3. EU Funds Managed by Odey Asset Management Discuss Investor Withdrawal Limits This was done as part of an emergency measure to contain the aftermath of allegations of sexual misconduct against the hedge fund manager’s founder uncovered in the FT’s investigation. Read full text.

Four. Ukraine claims to have breached Russian defenses and liberated at least three villages Yesterday in the south of the Donetsk region. The day before, President Volodymyr Zelensky confirmed that Kiev’s long-awaited counteroffensive had finally begun. Aims to liberate about 18 percent of the occupied territories in the southeastern region.

5. Former President Donald Trump’s allies rallied to defend him before he surrendered himself to authorities on criminal charges. The former president is due tomorrow in Miami to plead not guilty to 37 criminal charges related to alleged possession of classified material after he leaves the White House in 2021. Not all Republicans defended the former president, however. read more

big reading

Around the world, renewable energy infrastructure developers say they will have to wait years and up to 15 years before they can connect their projects to grids that are struggling to keep up with changes in power generation. It is said.I finally noticed that these connections are delayed Potentially devastating impact on global efforts to reduce greenhouse gas emissions.

I am also reading . .

• Argentina: Buenos Aires government increasingly desperate take the cap To both China and the IMF trying to avoid a currency crisis.

• Master of Finance in 2023: The FT’s annual ranking of master’s courses in finance was announced yesterday. French Business School Dominates List.

• Lana Folher: Last month, a major insurer announced it would stop selling insurance to California homeowners. Because of the danger of wildfires. Other states aren’t far behind because of climate change, Rana argues. She asked what would happen if America could no longer be insured.

chart of the day

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Pharmaceutical and biotech companies spent $85 billion on acquisitions in the first five months of this year, marking a dramatic recovery in deals as they look to replenish their drug pipelines. M&A surged, compared with just $35.6 billion in deals during the same period in 2022, according to investment bank Stifel. read more

take a break from the news

Former French President François Hollande recently sat down with FT editor Lula Calaf to discuss French politics, the Ukraine war and its response to the Kremlin. Hollande: Putin cannot be seduced. “He respects power.”

With Tee Zhuo Benjamin Wilhelm