Citi economists expect that the Federal Reserve will increase the target rate for fed funds by 50 basis points in March.

After January’s 7.5% increase in consumer prices, the bank revised its forecast. This is an improvement from December’s 7% gain.

Wall Street economists had been anticipating a quarter-point increase for March. Citi had called for five 25basis point rate increases in March 2022 beginning next month.

However, the fed funds futures marketplace began to value a chance for a half-point rate rise at next month’s meeting following the inflation report’s release and the comments of St. Louis Federal Reserve President James Bullard. Bullard said to Bloomberg News that he wants a 100-basis-point rate hike (or a total of 1%) by July.

The Citi economists wrote that the January core CPI data points to sustained inflation around 6%, spreading wider than Fed forecasts had predicted. We expect that the Fed will raise rates by 50bps in March, followed by four additional 25bp increases in May, June and September, as well as December’s rate hikes of 25bp.

Citi economists indicated that they expected three additional hikes in the future, after 1.5 percentage point or 150 basis points in 2022.

In an effort to combat pandemics, the Fed cut the Fed’s funds rate by zero at the beginning of 2020

Citi economists stated that they expect core inflation to remain strong in February. The economists also forecast core personal consumption spending inflation to rise above 3.5% in the fourth quarter compared with the fourth quarter. The Fed forecasts that this figure will rise to 3.5% in the fourth quarter, which is much higher than its median estimate of 2.7% for December’s economic projections.

Earlier Thursday, Grant Thornton chief economist Diane Swonk saidShe now anticipates that there will be a 50 basis-point increase in March.