'Three interest rate hikes in 2022,' says economist as consumer prices go up

Record ID: 1650615

  • Title: 'Three interest rate hikes in 2022,' says economist as consumer prices go up
  • Date: 10th December 2021
  • Summary: NEW YORK, NEW YORK, UNITED STATES (DECEMBER 10, 2021) (REUTERS) (SOUNDBITE) (English) MIZUHO SECURITIES USA, ASSOCIATE U.S. ECONOMIST, ALEX PELLE, SAYING: "This (today's CPI numbers) will ensure that the Fed doubles its pace of tapering at the December meeting, that it will announce, and then execute it actually in the December meeting. And I think it also increases the risk that the dot plot in the summary of economic projections that the Fed will release at its December meeting shows not just two hikes in 2022, but there's a risk that it actually shows three hikes in 2022 because even under a liberal definition of the Fed's new average inflation target, the Fed looks to be on track to achieve that next year."
  • Embargoed: 24th December 2021 15:19
  • Keywords: COVID-19 CPI data Omicron U.S. Federal Reserve consumer prices coronavirus health inflation pandemic
  • Location: NEW YORK, NEW YORK, + WASHINGTON, D.C., UNITED STATES, UNKNOWN LOCATIONS
  • City: NEW YORK, NEW YORK, + WASHINGTON, D.C., UNITED STATES, UNKNOWN LOCATIONS
  • Country: USA
  • Topics: Economic Events,Equities Markets,United States
  • Reuters ID: LVA005F7GI1JB
  • Aspect Ratio: 16:9
  • Story Text: U.S. consumer prices increased further in November as the cost of goods and services rose broadly amid supply constraints, leading to the largest annual gain since 1982, which could encourage the Federal Reserve to quickly wind down its bond purchases.
    The consumer price index rose 0.8% last month after surging 0.9% in October, the Labor Department said on Friday (December 10).
    In the 12 months through November, the CPI accelerated 6.8%.
    That was the biggest year-on-year rise since June 1982 and followed a 6.2% advance in October.
    Economists polled by Reuters had forecast the CPI climbing 0.7%.
    The report followed on the heels of news last week that the unemployment rate fell to a 21-month low of 4.2% in November.
    Tightening labor market conditions were underscored by a report on Thursday showing new applications for unemployment benefits dropped to the lowest level in more than 52-years last week.
    Other data this week showed there were 11 million job openings at the end of October and Americans quit jobs at near-record rates. The tight labor market is boosting wages and supply bottlenecks are showing little sign of easing, indicating that high inflation could persist well into 2020.
    Fed Chair Jerome Powell has said the U.S. central bank should consider speeding up the winding down of its massive bond purchases at its policy meeting next Tuesday (December 14) and Wednesday (December 15).
    Many economists are expecting an early Fed interest rate increase.
    Excluding the volatile food and energy components, the CPI rose 0.5% last month after gaining 0.6% in October. The so-called core CPI jumped 4.9% on a year-on-year basis after increasing 4.6% in October.
    The Fed tracks the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, for its flexible 2% target.
    The core PCE price index surged 4.1% in the 12 months through October, the most since January 1991. November data will be released later this month.
    (Production: Aleksandra Michalska)
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