Rate hikes by year end?

Voting Fed member Kocherlakota in an interview with the WSJ said the fed funds rate could go up by at least 50 bps by year end. He said its “possible” if the economy hits his present estimates. Now anything of course is possible, especially when dealing with the most dovish Fed in its history, but its noteworthy because it comes in the context of other Fed members that want QE2 to end (others of course still don’t) and the fed funds futures market that is only pricing in a 30% chance of just a 25 bps hike by year end. The Fed must be now paying attention to the growing worries of inflation and hopefully read today’s USA Today and saw the comment from Wal Mart, the biggest retailer in the US.

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