The Federal Open Market Committee of the Federal Reserve raised yesterday the target for the Federal Funds Rate to 5.5 % and guided again to one more hike of the Federal Funds Rate.
Apparently, most market participants think the next guided hike and the Federal Reserve will stop.
Wolfteam Ltd.'s corporate view is that there will be more hikes of the Federal Funds Rate from the Federal Reserve . I expect the Federal Funds Rate to surpass 7.0 % in the next two years.
Russia's withdrawal from the Black Sea grain exports corridor deal can again fan inflation big time. Wheat, corn coming from Russia, Ukraine is vital for bread production and consumption in the Middle East and Africa.
High energy inflation is not good, but if the prices of bread and bakery start increasing markedly this could turn out to be a catastrophe, causing social unrest in the Middle East and Africa.
Social unrest in the Middle East could close the Hormuz strait, the shortest way to transport oil from the Middle East and North Africa to consumers in China, India, Europe and the United States. That, on its turn could cause the price of oil to spike fanning inflation even more.
An inflation spiral could start, which will force the Federal Reserve to raise the Federal Funds Rate again aggressively.
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