This Was the Week the Fed Finally Figured It Out
The central bank now understands that to tame inflation it needs to get ahead of the markets, not simply guide them.
The Federal Reserve wants to be the leader of the pack.
Photographer: Marco Bertorello/AFP via Getty Images
Rates markets crossed two significant thresholds this week. One is that traders for the first time see the Federal Reserve raising its target interest rate by a half-percentage point in each of the next three meetings, in May, June and July, which would mark the biggest such increases since 2000. The other is that, for a brief moment, yields on benchmark Treasury Inflation-Protected Securities climbed back above zero.
The fact that both moves came soon after Federal Reserve Bank of St. Louis President James Bullard said he wouldn’t rule out the prospect of a 75-basis-point rate hike next month shouldn’t be lost on markets.