Traders are expecting the US Federal Reserve (Fed) to raise the benchmark interest rate to 5% per annum next year.

Last week, before the release of fresh data on the country’s inflation, they had anticipated a hike to 4.6%, rate futures indicated.

The stronger-than-expected jump in consumer prices almost guaranteed that the Fed would again undertake an aggressive interest rate hike at its next meeting in early November. As a result, it will be raised by 0.75 percentage points for the fourth consecutive time, the Financial Times said. As a result, the target range for the rate will be 3.75-4% per annum, up from almost zero in March this year.

The persistence of high inflation, along with a number of other factors including the state of the labor market, has also heightened fears that the Fed will undertake a similar increase in the cost of lending in December. At the same time, it is expected to increase by 0.5 p.p. in February.

Representatives of the U.S. Central Bank put the condition for abandoning aggressive monetary policy on the appearance of clear signs of slowing inflation.

Federal Reserve Bank of Minneapolis President Neel Kashkari (a non-voting member of the Federal Open Market Committee in 2022) said this week that the Fed may have to raise the rate above 4.75% per annum to contain the pace of consumer price growth.

“If we don’t see progress (in easing inflation – IF), I don’t know why I would advocate a stop at 4.5% or 4.75% or something like that,” he said. – We need to see real progress, but so far we don’t see it.”

Investor sentiment was also negatively impacted by the latest consumer price data in Canada and the U.K., where consumer prices rose more strongly than expected.

“This is a global story. The inflation figures in Canada and the UK surprised. It was the dynamics of global inflation that pushed US yields higher this week,” believes Societe Generale analyst Subadra Rajappa, who specializes in the US market.