JP Morgan Chase: Fed will raise interest rates 9 times this year

A note from JP Morgan Chase economists predicts the Fed "hiking interest rates nine consecutive times as central bank policymakers look to tackle hotter-than-expected inflation. The Fed is in a pickle because they actually must deal with both the balance sheet and inflation. Joe Biden's policies didn't create the Fed's balance sheet problem but they certainly created the inflation problem.

In an analyst note to clients, the JPMorgan economists, led by Bruce Kasman, projected nine, quarter-percentage-point rate increases at every policy-setting meeting until March 2023. "We now look for the Fed to hike 25bp at each of the next nine meetings, with the policy rate approaching a neutral stance by early next year," the note said.

The revised outlook comes after the Labor Department reported that the consumer price index rose 7.5% in January from a year ago, marking the fastest increase since February 1982, when inflation hit 7.6%. The CPI, which measures a bevy of goods ranging from gasoline and health care to groceries and rents, jumped 0.6% in the one-month period from December.

At this point, it's difficult to picture this Fed tackling both the balance sheet problem while raising interest rates. Further, it's difficult picturing the Biden administration learning anything from its free-spending ways. If anything, this administration is committed to spending trillions of additional dollars. FYI- a trillion dollars is 12 zeros; a million is 6.

Although policymakers did not provide an exact timeline for the interest rate liftoff, they hinted it could take place during their meeting on March 15-16. The minutes reinforced that sentiment, with officials indicating they plan to raise rates "soon" and that they will begin reducing the $9 trillion balance sheet shortly thereafter.

That doesn't inform us, though, of whether the Fed plans on following a 2-track policy of raising rates while reducing the Fed balance sheet or if they intend to raise interest rates first, then reducing the balance sheet. That's just part of the Fed's problem:

The outlook for Federal Reserve rate hikes after March may become less clear if Russia continues its incursion into Ukraine.

That's because the tensions have pushed up the price of oil and gasoline, a major purchase for many Americans, and it's the U.S. consumer that drives about 70% of the U.S. economy.

If the U.S. doesn't learn anything else from Putin's invasion of Ukraine, it's that getting U.S. fossil fuel policy right is essential to the U.S. economy and national security. This administration got that wrong, which handed Putin the money he needed to pursue his expansionist agenda: