The Fed vs Inflation

Concerns spread: The Fed's next move could be a shocker  

 

Wall Street has begun to seriously waver in its view of the Fed's interest rate cuts, and now a new debate has flared up: The next move may not even be a cut. Bloomberg reports. 

  

Former US Treasury Secretary Lawrence Summers said on Friday that there is a "significant risk" that the next step will be a hike after signs of overheating in the economy. Jupiter's fund manager Mark Nash estimates that the probability of an increase is 20 percent.  

 

Goldman Sachs chief investment officer Lindsay Rosner shares the risk picture and believes that the final leg of the inflation battle could be turbulent.  

 

- It feels a bit like a ping pong match when each new data point is released, she says. 

 

Citigroup strategists warn of a repeat of the 1990s and urge investors to "hedge" against a scenario where the Fed first lowers and then is forced to raise interest rates.