The Fed won't make a dovish pivot — and here's why it may need to press its offensive against inflation.
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Phil Rosen
Aug 18, 2022, 19:01 IST
Jerome Powell, Chairman of the Board of Governors of the Federal Reserve System testifies before the House Committee on Financial Services June 23, 2022 in Washington, DCWin McNamee/Getty Images
Economists aren't expecting the central bank to ease up its policy soon. Rather, the Fed needs to ramp up the heat in its battle against inflation.
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1. Investors shouldn't bank on smaller Fed hikes because still-high inflation doesn't warrant a pivot, Columbia economics professor Jeremy Sachs said Wednesday.
High prices won't let up anytime soon, Sachs maintained, and that means the Fed will have to continue forward with a heavy hand.
Meanwhile, "Dr. Doom" economist Henry Kaufman (no relation to Dr. Doom Nouriel Roubini) said he's still waiting for Jerome Powell to shock the market, and that a dovish move is not what the economy and markets need.
"I'm still waiting for him to act boldly," he told the FT.
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The 94-year-old economist — who made a famed 1982 call on interest rates while working at Salomon Brothers — thinks Powell should more closely follow the path forged by former Fed Chair Paul Volcker, who made a series of aggressive rate hikes in his tenure 40 years prior.
What do you think? Is it too early to poll the size of the next Fed rate hike? Email me at prosen@insider.com or tweet@philrosenn.
In other news:
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2. US stock futures edge up early Thursday, as investors weigh Wednesday's Federal Reserve minutes. Meanwhile, the US dollar index rose to near three-week highs. Here are the latest market moves.
3. On the docket: Estée Lauder Companies Inc., Applied Materials Inc., and Xero Ltd, all reporting. Plus, look out for the US unemployment insurance weekly claims report, due later this morning.
5. Russia expects prices for its natural gas exports to soar to $730 this year. According to a Reuters report, that forecast is a 140% jump from 2021, and a 39% hike from its previous expectation for 2022. Here's what you want to know.
7. Don't expect Iran to start pumping more oil anytime soon. Goldman Sachs warned in a note to clients that a stalemate between the US and Iran could be "mutually beneficial," not to mention Russia threatens the chances of an agreement coming to fruition. To the bank, a nuclear deal remains far off.
9. These charts show why stocks still have room to rally in the coming weeks. Stocks have climbed 17% since mid-June, but UBS highlighted why indexes could still move higher and investors could still reap more gains in the near-term. See the five breakdowns here.
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