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Some Fed officials favor a rate hike this month and September, to further bolster the fight against inflation.

Federal Reserve Chairman Jerome Powell frequently asserts that the agency still has a lot of work to do, and he does not rule out the possibility of consecutive interest rate increases. Last weekend, Fed governor Christopher Waller also reaffirmed his view that interest rates need to be raised twice this year.

“Since the June meeting, we’ve had an extra month of data to gauge the situation. And I’m increasingly confident that banking volatility won’t have a significant effect on the economy. I don’t see a reason why. so that the first rate hike doesn’t happen this month,” Waller said in a forum at New York University. He also affirmed that if inflation does not make progress and economic activity does not slow down much, the second interest rate increase will also take place soon. In other words, if inflation remains high, the labor market remains strong relative to average, and the economy shrinks only slightly, the Fed is likely to raise interest rates in September.

Fed rate adjustments since 2006. Graph: Reuters

Investors are betting the Fed will raise rates this month, after pausing last month. The agency has raised interest rates 10 times in a row since March last year, bringing the reference rate to 5-5.25 percent. This is the highest level in more than 15 years.

So far, most Fed officials have also signaled that they are inclined to raise interest rates in July. However, the decision in September will be more difficult. Because the Fed will have to decide whether to stop, or wait for more signals on inflation. All officials have clearly expressed their desire for inflation to cool down as soon as possible.

Bank worries have now been almost eliminated. The credit situation has also not been significantly tightened after the three bank failures earlier this year. Some leading banks even recorded a jump in second quarter profits.

This makes Fed officials more confident with the current tightening cycle, increasing the possibility of a rate hike in September. But of course, that still depends on other economic data, due to be released in a few months. next.

Core inflation (removing prices of volatile commodities) in June did not decelerate as quickly as normal inflation. The labor market has also remained stable, adding 209,000 new jobs last month. The next Fed meeting will take place on July 25-26.