Will Be 'Extremely Difficult' For The FOMC To Not Raise Rates Says Richards

Summary

Kitty Richards, a senior fellow at the Groundwork Collaborative, discusses the upcoming FOMC decision and argues it will be extremely difficult for the Fed not to raise rates. She says bond markets are already pricing a quarter-point move and warns that failing to hike could damage Kevin Warsh's credibility and push up longer-term rates. Richards also says the Iran conflict is keeping energy prices elevated and that SPR releases or a diesel export ban would not fix global oil and refined-product prices. She rejects the proposed $5,000 stimulus checks as unlikely legislation and discusses fiscal consolidation, tariffs, and the consumer impact of higher rates.

• Fed rate decision in focus with markets pricing a quarter-point hike.
• Richards says a hike is highly likely and tied to Fed credibility.
• Long-term borrowing costs could rise if the Fed fails to hike.
• Iran war and Strait of Hormuz supply disruption are pressuring energy prices.
• SPR releases and a diesel export ban are seen as ineffective Band-Aids.
• Richards favors repealing last year's budget bill for fiscal consolidation.
• Proposed $5,000 checks are viewed as unlikely to pass.
• Higher rates raise credit card, auto, and mortgage costs for households.