Economist Predicts Federal Reserve May Implement Five Rate Hikes

Economist Neil Dutta predicts the Federal Reserve System may implement a total of four or five interest rate hikes to address sticky inflation. He suggests the central bank will likely undo the 75 basis points of insurance cuts made last year, with potential hikes occurring in December and March.

Dutta anticipates the Federal Open Market Committee will revise inflation expectations upward during its March meeting if core inflation remains high, a move that would necessitate further rate increases. While the market has recently reduced its own expectations by removing one hike, Dutta argues that the Federal Reserve's actions will remain conditional on data and inflation forecasts.

This outlook includes the possibility of back-to-back rate moves in the second quarter of the coming year. Dutta believes a reasonable first pass is that the central bank will undo previous cuts to stabilize the economy.