بالشعب و للشعب
Sunday, Mar 03, 2024
World's Arab Press Reports
Add Your News
'Markets are going to get rocked' as Fed is likely to push rates higher, economist warns
Markets are going to get rocked as the Federal Reserve pushes interest rates higher, said top Fed watcher Ricardo Reis.
The Federal Reserve is likely to raise interest rates more than the markets now expect, says Ricardo Reis, an economist at the London School of Economics.
“Markets are going to get rocked,” Reis told MarketWatch on the sidelines of the American Economic Association annual meeting in New Orleans on Saturday.
“All the risks are on the upside. A rate of 5.5% is the minimum,” he added.
Last month the Fed raised the top end of its benchmark rate range to 4.5%. The central bank penciled in a 5.25% terminal rate.
Investors who trade in the fed-funds futures market now expect the Fed to stop raising when rates get to 5%.
Reis thinks the central bank will ultimately move rates higher.
The Fed is burned by failing to recognize the persistent upward move of inflation in 2021, he said.
“So I think they are biased toward over-tightening,” he said. “Either legitimately or because they are worried about fixing their past mistake, there are going to be tighter than you think.”
The economy is at a turning point and the Fed does face some “tough calls,” Reis said.
The key going forward is the path of wages.
Workers need to have their wages go up because their paychecks have not kept up with inflation.
So the Fed is going to have to gauge if the rise in wages is too much, just right or too little, he said.
If wages don’t rise much, inflation can quickly return to the Fed’s 2% target, he said.
If wages rise in line with productivity, the Fed won’t have to raise too much and inflation will come down to 2% in a few years.
This will be difficult because productivity is an economic variable that is hard to measure.
If wages spike, this would probably cause companies to continue raising prices, kicking off a wage-price spiral, Reis warned.
The Fed might overreact to the rise in wages, he said.
There is a scenario where rates go up “much more,” Reis said. But there is a range — it could be “much much more” or “much more” or “just more.”
Reis said that he was sympathetic to the idea that raising the unemployment rate to 5.5% was not a terrible outcome if it means a return to low inflation.
The unemployment rate hit 3.5% in December.
Stocks moved sharply higher Friday when the government reported relatively slow increase in wages in December.
US Starts Airdropping Aid To War-Hit Gaza As Israeli Strikes Continue
The U.S. has initiated airdrops of aid into the conflict-stricken Gaza area as Israeli strikes persist.
Saudi non-oil exports to GCC nations surge by 42% to hit $5.55bn
Saudi Arabia reported a 42% increase in non-oil exports to GCC countries, reaching $5.55 billion in Q4 2023, largely due to a surge in re-exports, which doubled in value.
Saudi Arabia takes bold strides toward greener future and carbon neutrality
Saudi Arabia is making significant advances towards a more sustainable future by aiming for carbon neutrality, focusing heavily on carbon credit offsets to combat greenhouse gas...
Ireland trade minister: Saudi Arabia offers ‘extraordinary opportunity’ for Irish firms looking to invest
Ireland's Trade Minister, Simon Coveney, has highlighted the exceptional investment opportunities for Irish businesses in Saudi Arabia, across various sectors such as technology...
Germany’s WIKA opens new plant in Dammam
WIKA Group, a German company, has inaugurated a new manufacturing facility in Dammam's industrial city, MODON, on February 29.
Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil
Arab finance ministers convened with global counterparts at the G20 finance ministers and central bank governors meeting in Brazil to discuss issues of multilateralism and econo...
The brewing secrets behind tastier no-alcohol beer
Joe Thomson, overlooking his brewery, has seen a surge in demand for the non-alcoholic beer Shorebreak, which became Firebrand Brewing Company's top canned beer since its 2022 l...
UN official praises Egypt for aiding Gaza
The UN's Food and Agriculture Organization's chief has commended Egypt for its crucial humanitarian assistance to Gaza.
Investigation into death of El-Arish University student reopened
The Egyptian Public Prosecutor has decided to reopen the investigation into the death of El-Arish University veterinary student Naira Salah El-Zoghbi, following social media all...
Thousands Rally Against Economic Crisis in Tunisia
In Tunis, thousands gathered outside the prime minister's office to protest against declining living standards, spurred by the country's largest trade union.
Kuwait calls on voters to elect members of the national assembly on April 4
Kuwait has announced parliamentary elections scheduled for April 4, as reported by Kuwait News Agency.
Tunisian authorities investigate a fire at a synagogue, question a suspect in custody
Tunisian officials are investigating a suspect detained for allegedly starting a fire at an eastern synagogue's garden.
Subscribe also to our WhatsApp channel:
Add Your News
بالشعب و للشعب
China Criticizes US for Vetoing UN Ceasefire Resolution in Gaza
Saudi Arabia ranks first in UN index for e-government services in MENA
Israel Records 20% Drop In GDP, War In Gaza Is The Reason
Saudi Arabia's FDI Inflows Grow with New International Standards
Venture Capitals Power Up Across MENA Region
PM Modi Announces Opening Of New CBSE Office In Dubai
January Funding for MENA Startups Totals $86.5 Million
Saudi Arabia accelerates digital economy growth through Nvidia partnership
Israel unveils tunnels underneath Gaza City headquarters of UN agency for Palestinian refugees
Israel deploys new military AI in Gaza war
Egypt threatens to suspend key peace treaty if Israel pushes into Gaza border town, officials say
Saudi Arabia Warns Of A "Humanitarian Catastrophe" If Israel Moves On Rafah
US University To Shut Qatar Campus Due To "Heightened Mideast Instability"
Facebook and Instagram Ban Iran's Supreme Leader
Defense Technology Showcase Held in Riyadh
Saudi Arabia’s non-oil exports rise 2.5% to $6bn in November 2023: GASTAT
Rolls-Royce Executive Encourages Saudi Women to Tap into Their Inner 'Superhero' for Success in Defense Industry
Saudi Arabia launches National Academy of Vehicles and Cars
Saudi Tourism Minister Reveals Plan for 250,000 New Hotel Rooms by 2030
SAR to more than double eastern network passenger capacity with new trains deal
Saudi Arabia Enhances National Defense with New Partnerships
Saudi Aramco Maintains Arab Light Crude Pricing to Asia for March
NEOM Establishes New York Office to Support Investors
Saudi Wealth Fund Draws in Over $25 Billion Worth of Investments in Three Years, Al-Rumayyan Reveals
The Saudi Kingdom's Ultimatum to Israel: A Win-Win Peace with Saudi Arabia and the Arab World, or a Lose-Lose Continued Occupation and Endless Conflict
Biden condemns anti-Arab hate after WSJ opinion piece calls Dearborn ‘jihad capital’
Turkey Releases Seven Hostages Captured by Pro-Gaza Gunman
Arab Parliament Commends Women's Contributions to Societal Development
British and Hungarian Foreign Ministers visited Lebanese leaders to stress the importance of enacting UN Resolution 1701
Yemen's Houthis Say They Targeted British Merchant Vessel In Red Sea
Donald Trump Nominated for Nobel Peace Prize for 'Historic' Middle East Policy
US lawmakers approve F-16 jet sale to Turkey following NATO expansion support
Saudi Arabia Climbs 25 Places in World Bank's National Statistics Indicator
Tourism Growth in Saudi Arabia Fuels Advancements in the Hospitality Industry," Says Rotana Official
Houthi Rebels Request Departure of UN Staff from Yemen, Including US and UK Personnel, within a Month
Modi Inaugurates Hindu Temple on Site of Demolished Mosque in India
Over 25,000 Deaths in Gaza Amid Israeli Offensive
Escalating Clashes in Gaza as Israel Distributes Leaflets to Assist in Locating Hostages
Turkey's First Astronaut Set to Launch for International Space Station Today
Head of Palestinian Investment Fund Warns More People May Die of Hunger Than War in Gaza
Palestinian Envoy Criticizes UK for Alleged 'Double Standards' in Policies Toward Israel
Morocco to Lead UN Human Rights Council in 2024
Is artificial intelligence the solution to cyber security threats?
Egypt has been identified as the leading military force among Arab nations and ranks 15th globally
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Iranian Nobel Laureate Narges Mohammadi Receives Additional Prison Sentence
"Gazans Urge Israeli Forces to Target Hamas in Leaked Audio"
Biden States US and UK Airstrikes on Houthis Were a 'Defensive Action
Large Pro-Palestine Rally in London as Gaza Conflict Hits Day 100
South Africa Urges World Court to Halt Israeli Actions in Gaza