As we note in the ECONOMIC UPDATE section of this week’s Trends Journal, the bet on The Streets is that the U.S. Federal Reserve will raise interest rates only a quarter of a percent on 1 February. Slower growth in consumer prices and wages has made it almost certain that the U.S. Federal Reserve will raise its key interest rate by only a quarter point next month, after raising it three-quarters of a point four times last year and by a half point twice, according to the Financial Times.

A quarter-point bump would bring the rate to between 4.5 and 4.75 percent.

Several Fed officials have signaled they lean toward a quarter-point hike, although they also have emphasized that rates, though rising more slowly, still are likely to exceed 5 percent this year.

The central bankers will “make sure we know we’re still far away from victory and there is still more to come” in terms of rate increases, Blackrock strategist Gargi Chaudhuri told the FT. “Higher for longer is the theme.”

Core inflation, which ignores energy and food prices, rose 0.3 percent in December from November, telling the Fed that inflation may not be fading as fast as market players would like to believe, even though overall inflation slowed in December to 6.5 percent from 7.1 the month before.

On 14 January, speculators in interest rate futures placed the chances of a quarter-point rise next month at 93 percent, compared to 77 percent the day before, CME Group data showed.

The odds jumped after Patrick Harker, president of the Federal Reserve Bank of Philadelphia and a member of the Fed’s rate-setting committee, said he expects the bank to raise rates “a few more times” this year and that quarter-point increases are “appropriate.”

Speculators continue to bet that the Fed’s key rate will peak below 5 percent and cut rates by at least a half point by 2024.

Betting on the come, equity markets also have rallied in recent weeks.

TREND FORECAST: Regardless of how high the Fed raises rates, it will have little effect on overall inflation and it will do nothing to bring the inflation rate down to their magic made-up number of 2 percent that former Fed Head number that Ben Bernanke made as an unequivocal policy target in 2012.

This is the same Bernanke who won the Nobel Prize in Economics last October that was blindly arrogant to see the economic future.

In a CNBC interview on July 29, 2005, Bernanke, the Harvard graduate and former Princeton Professor of Economics, was asked:

Q. “Tell me, what is the worst-case scenario if we in fact see [real estate] prices actually come down substantially across the country?”

A. “Well I guess I don’t buy your premise. It’s a pretty unlikely possibility; we have never had a decline in house prices on a nationwide basis.”

Speaking before Congress 18 months later (28 February 2007), as the subprime mortgage fiasco deepened, Bernanke said: “There is not much indication at this point that subprime mortgage issues have spread into the broader mortgage market which still seems to be healthy.”