I perfectly agree with Bill Dudley that the Fed will have to raise rates and they will go much higher than investors anticipate. /Bloomberg, 5/11/2021/
Investors are indeed focused on the last business cycle, in which the federal funds rate never exceeded 2.5%. This time, however, short-term memories are not good enough to rely on. We had a once-in-a-century pandemic and we are on the right track to make a very quick comeback you have probably never seen before.
This is the beginning of a completely different business cycle.
Besides, changing but still accommodative fiscal and monetary policies will stay with us for a long period of time. This means that new economic and financial shocks can be handled in the future.
Governor Matolcsy, MNB, the Central Bank of Hungary