Fed hikes interest rates due to high inflation

The Federal Reserve Bank will hold another significant interest rate hike in early November, so that the 4,75%-5% mark will already be set for next year due to the persistently high inflation rate.

After the Labor Department report showed the consumer price index jumped 0,4% in September from a month earlier, U.S. interest-rate futures traders began to tune in to the Fed's more aggressive policy, estimating the odds of a rate hike above 5% next year as 1:3. Rates are up 8,2% from last year, well above the Fed's 2% target.

"Our policy hasn't really turned around as much as it should have to improve our condition", Rafael Bostic, president of the Atlanta Fed, said on Wednesday before the report.

Analysts say a recession triggered by a rate hike will barely be avoided because, particularly because of price pressures in real estate, as well as ongoing labor market tensions that are fueling wage pressures —  the chances of a leveling off will be dwindling.

In the end, the Fed could go too far, thereby forcing itself to change course to offset the possible effects of a full-blown recession.