Despite the Federal Reserve’s restrictive policies since last year to control inflation, the latest Consumer Price Index (CPI) data showed that inflation rose by 0.5% sequentially and 6.4% year-over-year. Moreover, the hotter-than-expected jobs data from last month suggests that there is still work to be done to achieve the Fed’s 2% inflation target.
If inflation fails to slow down and the jobs market continues to remain tight, then the Fed might be forced to raise the benchmark interest rate higher than it had previously predicted. Goldman Sachs predicted interest rates to rise three more times this year, taking the rates to a peak range of 5.25-5.5%.
