'If multiple FOMC members considered a 50 basis point hike when deflation seemed much more robust, there's a serious chance the Fed actually follows through on ramping up the rate hikes in March,' writes TianaTheFirst.
Last week, I made the case that the Fed is more likely to ramp up its rate hike campaign now that Joe Biden has poached its dovish vice chair. The newly released minutes from last month's Federal Open Market Committee meeting confirm that several members wanted to increase the federal funds rate by half a percentage point, twice the 25 basis point hike they ultimately approved.
"A few participants stated that they favored raising the target range for the federal funds rate 50 basis points at this meeting or that they could have supported raising the target by that amount," the minutes from the last FOMC meeting read.
Now, consider these underlying economic factors in conjunction with personnel signaling from the Fed. Lael Brainard is due to depart the Fed to direct Biden's National Economic Council prior to March's FOMC meeting, and the more hawkish members of the Fed have deployed a full-court press to push more aggressive rate hikes. Neel Kashkari has specifically cited January's jobs growth as a reason the terminal rate should hit 5.
If multiple FOMC members considered a 50 basis point hike when deflation seemed much more robust, there's a serious chance the Fed actually follows through on ramping up the rate hikes in March. If next month's CPI report is as disappointing as February's, maybe even markets will begin to price in the pressure.
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