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Dudley Says Fed Will Hike Rates Much Further Than What Markets Expect

  • Powell: June SEP best guide, shows 3.25%-3.5% year-end rate
  • Upside for markets ‘very much capped,’ ex-N.Y. Fed leader says

Financial markets are underestimating just how far the Federal Reserve will go to tame a decades-high inflation rate, according to former New York Fed President Bill Dudley.

In a press conference following the central bank’s decision to raise interest rates by another 75 basis points, Chair Jerome Powell repeatedly referenced his colleagues’ summary of economic projections from June as the “best guide” to where the committee needs to tighten policy. That shows the federal funds rate ending this year at 3.25%-3.5%, plus another 50 basis points of tightening in 2023.