US interest rates will have to increase a lot more than Federal Reserve boss Jerome Powell is currently planning if inflation is to be controlled effectively, according to one of the top strategists at Bridgewater Associates, the world's largest hedge fund.

In a report by Bloomberg, Rebecca Patterson, who has previously been a member of the Fed’s advisory committee, is quoted as saying that: “Markets are discounting that you are going to have inflation not back down to 2%, but to around 3%, over the next three years – and that’s with a lot of Fed tightening. The question to us is if it’s enough to get inflation to where markets are discounting it. We think the risk is that it is not.”

While Patterson didn't detail by how much she thinks the Fed will need to hike rates, she did suggest that the benchmark rate will have to rise to a much higher level than expected if inflation is too be brought back to anywhere near the central banks 2% target for the personal consumption expenditure index.