Wells Fargo's global strategist predicts at least 2 more rate hikes before the year ends

The US Federal Reserve may not be able to pause its spate of rate hike just yet and give the American economy a steadying hand, because inflation continues to appear stubborn. That’s the view from Gary Schlossberg, Global Strategist at Wells Fargo Investment Institute. So the global markets may have to swallow at least 2 more rate hikes by the American Central Bank before the year winds down.

Schlossberg told CNBC-TV18, “Our view is that economic growth is winding down, but the sharp drop in inflation that we saw in the first half of the year may be losing a little momentum. Inflation may be levelling out at a rate well above the Fed’s 2 percent target rate because of some concerns in the market as well as the less optimistic view of Fed policy. So, we could see another 1-2 rate hikes before the year is out even as the economy winds down.”

The US Fed has been hiking rates steadily for over a year now, taking benchmark borrowing costs to a level not seen in 22 years. The benchmark Fed Funds Rate has risen from 0-0.25 percent in March 2022 to 5.25-5.50 percent in July 2023, as it aggressively moves to combat inflation that remains at nearly double the central bank’s comfort level. Us Federal Reserve Chairman Jerome Powell has said that while inflation has moderated somewhat since the middle of last year, it still “has a long way to go” to get to the 2 percent target.