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Inflation, supply chains, energy prices may push Fed to hike rates faster: S&P

‘Inflation strains are prompting some central banks to tighten, raising funding costs,’ rating agency says

Persistent inflation, supply chain disruptions and energy prices could trigger wage inflation and push the Federal Reserve and other central banks to increase interest rates faster than expected, S&P Global Ratings said Tuesday.

“After a decades-long retreat, inflation is back. Prices are rising, often dramatically, for items such as oil, semiconductors, and vehicles,”the global rating agency said in a statement.

“Inflation strains are prompting some central banks to tighten, raising funding costs,”it added.

With global demand growth outrunning supply growth, the agency said inflation is rising quickly almost everywhere around the world.

“Recent Fed signaling has prompted investors to speculate that the central bank may raise interest rates sooner and faster,” it said.

Fed Chair Jerome Powell said last week that the central bank is ready to use all of its tools to fight high inflation.

His comments also suggested that the Fed would discuss winding up its asset purchases at a faster rate at its next meeting on Dec. 14 – 15.

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