The Federal Reserve is under pressure to bring some of the price pressures down before they cause serious harm to the economy, as US inflation is running a lot hotter and through a lot more sectors than expected.
Inflation rose more than expected in April, according to data this week. This was below March's 8.5% increase but above forecasts for a reading of 8.1% and still 40-year highs.
The dollar soared to a 20-year peak as investors sought juicier returns than they might find elsewhere.
There is a case for the Fed to raise rates by three quarters of a point in order to stave off inflation.
The central bank can only control the demand side of the equation, not the supply side, as Chair Powell said this week, which has been a driving factor in the rise in consumer price pressures.
The question of whether we can execute a soft landing or not depends on factors that we don't control, Powell said in an interview.
In May, the Fed raised interest rates for the first time in 22 years to combat inflation. The faster hiking cycle will fight inflation. Powell said the central bank would likely raise rates by 50 and 75 basis points in June and July.
Bill Gross and Liz Young said the Fed would be forced to do more to control inflation if it moved more aggressively.
A number of market experts think the same thing.
El-Erian is a chief economic adviser.
El-Erian called out the Fed for its slow response to inflation and called on it to do more.
He said that the Federal Reserve needs to be open to larger rate hikes if it wants to tame rising inflation.
The Fed needs to be more open minded, not just give us good news. In an interview with CNBC, El-Erian said to be brutally honest.
They have to be more humble. He said they can't take anything off the table.
Bill Gross is a billionaire investor.
It's not known for now, but I think 3-4% is where we settle in, without continued hostilities in the Ukraine. If the Fed wants to return to 2%, it has more wood to chop.
The bond king has previously been cautious of the Fed hiking rates too aggressively.
Peter Schiff is the chief economist at Europac.
The core inflation rate spiked.6 percent in April, more than expected. The Fed must fight harder to defeat inflation as investors realize. The Fed will soon stop pretending to fight inflation because it has already won.
Liz Young is the head of investment strategy.
The consumer price index is lower than last month, but not low enough. We are still in the thick of it. The market has no reason to calm down yet because the Fed has no reason to stop.
Bank of America strategists.
The report leaves the Fed comfortable with rate hikes in the near term. Bank of America does not think there is a high risk of a 75bp hike.
This report adds to the debate on the margin.
Goldman Sachs strategists.
We expect significant growth deceleration, in level terms inflation remains sufficiently above target that central banks will likely continue to hike.
The Fed will likely have to be less restrictive in its policy stance because of the tighter financial conditions.
Seema Shah is the chief strategist at Principal Global Investors.
By the end of the year, we expect headline inflation to fall to 5.5%. The pressure on the Fed is going to remain intense because companies are still displaying impressive pricing power, inflation expectations are elevated, and the labour market is red hot. A couple more prints like this and a rate rise may be on the table.
Richard Flynn is a managing director.
Growth has weakened in the first months of the year. Government spending and loose monetary policy kept the economy afloat. The Fed has embarked on a series of aggressive rate-hikes in a bid to tackle inflation, which is likely to put further pressure on consumer demand and economic growth. The negative consequences of high prices are not in the mirror.
Federated Hermes has a senior economist.
Today's inflation won't do much to alleviate the concerns of financial markets. Inflation will likely remain sticky in the coming months, meaning that uncertainty about inflation developments and the Fed's reaction function will linger, resulting in elevated market volatility. The report will strengthen the Fed's resolve to tighten aggressively at its upcoming meetings, which will lead to 50bp hikes in June and July.