The economic data coming in over the last week has by and large been characterized by one word: hot. U.S. nonfarm payrolls employment surged by 517,000. Retail sales jumped by 3%. Consumer and producer prices did decelerate on a year-over-year basis, but not by as much as forecast. After the PPI data, economists at Goldman Sachs added another quarter-point rate hike to their forecasts, so that they now see 25 basis point hikes in March, May and June, which would take the fed funds rate between 5.25% and 5.5%.
Regional Fed Presidents James Bullard and Loretta Mester stepped to the microphone on Thursday to say they wanted a 50 basis point rate hike last month, rather than the quarter-point the Fed opted for in a unanimous vote. (Bullard and Mester were on the outside looking in as they’re not voting Federal Open Market Committee members this year.) Chris Turner, global head of markets at ING, says it might be too early to let hawkish views soar. “We think the better activity data is partly weather-related and had always thought that the next leg of the U.S. disinflation story woul …