Fed to Deliver Three More Rate Hikes Amid Strong Labour Market

Nordea analysts Ole Håkon Eek-Nielsen and Jan von Gerich predict three more rate hikes from the Federal Reserve to combat inflation. They point to falling unemployment, a constrained labour supply, and rising core PCE and service price inflation as key drivers.

The authors stress that wage pressures and higher goods prices could justify additional policy firming. 'The interest rate decision will come down to unemployment and inflation,' they say, citing the June meeting minutes.

'Almost all of these participants indicated that some policy firming would likely be warranted' in a stable labour market with still-elevated inflation, according to the minutes.