Inflation flips Wall Street's Fed interest-rate bets

Remember how this was supposed to be the Hot Rate-Cut Summer?

Despite falling gas prices, economists and Fed watchers remain concerned that stubborn sticky inflation driven by rising service costs and solid wage growth could persist through the year-end. This underlying pressure may compel the Kevin Warsh-led Federal Reserve to hold interest rates higher for longer to fully cool the economy.

That may also include interest-rate hikes.

Yes, the narrative around U.S. monetary policy has completely inverted. With May Headline PCE climbing to 4.1% and core PCE hitting 3.4%, economists are no longer asking "'When the Fed will cut" but rather "How soon it will hike?"

Federal Reserve Bank of Minneapolis President Neel Kashkari, a voting member of the FOMC, said June 26 that signs of widespread inflation led him to pencil in one interest-rate increase for this year in the Fed's June 16-17 economic projections or "dot plot."

"I'm concerned about inflation, and it's not only tied to what's happening in the Middle East, it's just the impression of broader inflationary pressures in the economy," Kashkari said in an interview with Bloomberg News.

The widely-watched CME Group FedWatch Tool

Fuente original: Yahoo Finance (https://finance.yahoo.com/economy/policy/articles/inflation-flips-wall-streets-fed-151700491.html)