Shifting expectations

Markets are preparing for higher US interest rates

The battle against inflation is likely to last longer than most large central banks had anticipated. Statements and comments by Federal Reserve Chairman Jerome Powell in front of the Senate Banking Committee this week suggest that the US central bank may be preparing to increase the policy interest rate by another 50 basis points in the upcoming meeting of the Federal Open Market Committee on March 21-22, which means policy-induced volatility would continue in financial markets. The Fed had slowed the pace of rate hikes to 25 basis points after its last meeting on February 1, compared to 50 basis