Friday, September 22, 2023
HomeEconomyFed may raise rates by 100bps in September - Nomura

Fed may raise rates by 100bps in September – Nomura

(Reuters) – The Federal Open Market Committee, the Federal Reserve’s policy-setting committee, is likely to raise its short-term interest rate target by a full percentage point at its policy meeting next week, as there are upside risks to inflation, analysts at Nomura said on Tuesday.

In a research note released after the U.S. consumer price index report for August beat expectations, the investment bank also said it raised its forecast for terminal rates Basis to 4.75%-4.75% to February2023.

The Fed will announce its policy decision at the end of next week’s two-day meeting, September 20-21.

Last month’s consumer price index unexpectedly climbed 0.1% from July, and last month 25 rose 8.3% U.S. labor The ministry reported on Tuesday that the months ended in August.

Economists had expected small monthly declines amid falling energy prices, paving the way for the U.S. central bank to potentially slow the pace of interest rate hikes. rate hikes in the coming months. But the report showed accelerating inflation in the services sector, with rising rental costs of particular concern, which tends to be sticky from one month to the next.

“For some time we have been highlighting an emerging wage price spiral and increasingly volatile inflation expectations that could keep inflation at bay for longer,” wrote Nomura. Staying high requires a stronger response from the Fed. “Based on the latest data, we believe these risks are starting to measure inflation across a broad range of goods and services through higher. “While money market traders are pricing heavily in favor of another 75 basis point hike next week [FEDWATCH], there is a one-five chance the Fed will raise rates from zero the day before the CPI report.

The market believes the policy rate to reach 4.%-4.25% range to the end of this year, 4.25%-4.5% to March.

Nomura The Fed is forecast to raise the federal funds target rate by 50 basis points at its November and December meetings. The federal funds target is currently 2.25%-2.50%, followed by Fed20 – July rate hike basis points.



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