Survey data released on Tuesday showed U.S. business activity unexpectedly rebounded in February to reach its highest in eight months.
St. Louis Fed President James Bullard said on Wednesday that the U.S. central bank needs to get inflation on to a sustainable path down toward its 2% goal this year or risk a repeat of the 1970s, when interest rates had to be repeatedly ratcheted up. He is the latest Fed official to signal that higher interest rates is likely needed to bring inflation back to desired levels.
“The USD along with assets market is reacting to the realization of investors that it may have been hasty to overlook the Fed’s hawkish guidance at the start of this year,” said Jane Foley, head of FX strategy at Rabobank in London. “Stronger-than-expected U.S. data releases since the start of this month have reinforced the Fed’s messages about stronger for longer interest rates.”
Fed funds futures traders are now pricing the fed funds rate to…