Joseph Lavorgna, chief economist for the Americas at Sumitomo Mitsui Banking Corporation and an adviser to U.S. Treasury Secretary Bessent, said on the 23rd that he expects the Federal Reserve to raise interest rates three to four more times. He said that the single rate hike implemented at the Federal Open Market Committee meeting on the 16th, the first in about three years, would "change nothing" in financial conditions, and that he anticipates additional moves at the FOMC meetings in December and next year in January and March at least, with a possibility of continuing in April depending on economic conditions. On the next meeting on October 27 and 28, meanwhile, he analyzed that, coming just before the midterm elections on November 3, proceeding with a rate hike while President Trump is calling for rate cuts could amount to "a provocation toward the White House," and predicted the Fed would hold steady unless a sharp acceleration in inflation is confirmed. He also assessed Bessent's coordinated yen-buying intervention with Japan and Treasury buybacks aimed at curbing the rise in long-term U.S. yields as "two wins out of three," saying that while there had been some success in correcting the weak yen, the 10-year U.S. Treasury yield has risen well above 5 percent and is "probably too high compared with the level Bessent would want."
Adviser predicts 3-4 more Fed hikes and notes Bessent's yen-buying intervention correcting the weak yen, both yen-supportive.
