BlockBeats News, June 18th, Federal Reserve officials hinted on Wednesday local time that they may soon need to raise interest rates instead of cutting them, in the context of rapid inflation, marking a dramatic shift in thinking.

Evercore ISI analyst Krishna Guha suggested that the decline in energy prices may bring some relief in the coming months. However, he warned that the interest rate outlook has decoupled from oil prices, indicating deeper uncertainty about whether potential inflation will cool enough to prevent the Fed from ultimately raising rates. Guha said that in addition to energy, two pressures are still present: the continued pass-through effect of tariffs and cost spillovers from the artificial intelligence infrastructure investment frenzy.

New Century Advisors Chief Economist and former Fed economist Claudia Sam said that the conditions typically prompting the Fed to respond to supply-driven inflation have not yet been seen, namely an overheated labor market or unanchored inflation expectations. However, she acknowledged that the rationale for action is accumulating. "I can understand the view that the Fed should be prepared to intervene and raise rates if the situation deteriorates," she said. The Fed's pace of action may be faster than when inflation surged during the pandemic, as "they have already been having this debate."