Fifty Basis Points or Bust, Say Fed Forecasters

Not only will the Fed hike the fed funds rate by 50 basis points tomorrow, it will also issue a statement indicating it remains concerned about the potential for inflation to accelerate, Wall Street forecasters are saying. The central bank doesn't dare do otherwise, the forecasters assert.

But for all the agreement on that point -- 27 of 29 top Wall Street dealer firms polled by Reuters are looking for a 50-basis-point hike -- there is remarkably little consensus on how the Fed will proceed in the months ahead.

A 50-basis-point hike in the fed funds rate tomorrow, to 6.5% from 6%, would be the first rate action of more than 25 basis points since the 50-basis-point hike that ended the last tightening cycle, in February 1995. It would take the fed funds rate to a level not seen since 1991. And it would be the sixth rate hike by the Federal Open Market Committee since June. ...