On My Mind: The Fed Will Hike Again—Because It Can

While the financial markets seem to be betting on a very extended pause in the US Federal Reserve’s multiyear tightening cycle, Franklin Templeton Fixed Income Group Chief Investment Officer Sonal Desai has another idea. Here, she makes the case that interest‑rate hikes may still be on the table this year.

The US Federal Reserve (Fed) performed a remarkable 180‑degree turn between December and January. On December 19, the Wall Street Journal’s opinion page was titled “Powell to Markets: Take That,” with the subtitle “The Fed says more rate increases are coming, so get used to it.” Just a month later, the same page was titled “The Fed Apologizes,” with the subtitle “Powell continues his rehabilitation tour, and the markets applaud.”