The U.S. Federal Reserve (Fed) has begun to aggressively raise interest rates since March 2022. After announcing another interest rate increase at the FOMC meeting in July this year, it has raised the federal benchmark interest rate to 5.25%-5.50%, a record high since highest level since 2001.
The chance of a rate hike in September is only 1%
Investors are paying attention to the Fed's September interest rate decision, which will be announced at 2 a.m. Taiwan time on Thursday (21st). Currently , the market generally predicts that interest rates may remain unchanged at 5.25%-5.5% .
According to data from CME Group's FedWatch tool, at the time of writing this article, the market believes that the probability of raising interest rates by another 1 percentage point at the September meeting has dropped from 20% to 1%, while the probability of keeping rates unchanged has soared from 80% to 99%.
Interest rates may be raised again this year
However, this does not mean that the cycle of interest rate hikes is over. In view of the fact that the annual growth rate of the U.S. CPI (U.S. Consumer Price Index) in August last week was 3.7% (expected to be 3.6%), which has continued to rise since May this year (the previous value (3.2%), indicating that inflation is accelerating, the job market is strong, and interest rates are likely to be raised again this year .
In this regard, analysts at JPMorgan Chase in the economic data report predicted that the dot plot released after the Fed meeting may reveal that policymakers will raise interest rates again this year, leaving room for decision-making at the November and December meetings.
But Rubeela Farooqi, chief U.S. economist at High Frequency Economics, expressed a different view:
Last week's inflation report supports the FOMC's decision to keep interest rates unchanged this week. As for the future policy path, inflation, the labor market, and the delayed and cumulative effects of previous tightening of monetary policy will all be taken into consideration, which will help determine whether the Fed Has the interest rate hike been completed or is there still room for further interest rate hikes?
The FOMC is currently expected to keep interest rates unchanged until the end of the year.
FedWatch data shows that there is a 69% chance of a 1-point rate hike in November, bringing the federal funds rate to 5.5% to 5.75%.
Further reading: Oil surge boosted U.S. CPI in August, experts: The Fed may raise interest rates longer and longer
Bitcoin breaks through 27,000 mg
Perhaps it was a bet that the Fed's interest rate hike cycle had reached its end. Bitcoin broke through $27,000 at the moment, hitting its highest point since September. However, the dynamic zone should remind you that even if the Fed's interest rate hike is really over, based on historical experience, there is usually a long period of deviation from the bottom of the stock market. Investors are advised to be careful of fluctuations.
Super central bank week is here
In addition to the FOMC on Thursday, central banks from the United Kingdom, Switzerland, Brazil, Philippines, New Zealand, Indonesia, Sweden, Norway, South Africa, etc. will announce interest rate decisions, while the Bank of Japan will announce on Friday (22nd) The latest interest rate decision can be called a "super central bank week".
The market generally predicts that the Bank of England will raise interest rates by another 1% to 5.25%. Although officials are expected to remain flexible and will not explicitly say that this is the last rate hike in this tightening cycle , the market believes that it may be the last due to the rapid contraction of the British economy. Once .
Switzerland and Sweden are expected to raise interest rates by 1 percentage point each, while the central bank of Turkey may further raise interest rates by about 5 percentage points to 30%, the central bank of the Philippines may raise interest rates by 1 percentage point, and the central banks of Indonesia and South Africa may keep interest rates unchanged.
The Bank of Japan is expected to keep interest rates unchanged on the 22nd and will not abandon its negative interest rate policy. Bloomberg economists believe that Bank of Japan President Kazuo Ueda may adopt a "hawk" attitude due to the weak yen. However, as domestic demand remains weak, wage growth is not smooth, the Bank of Japan's estimated output gap has not yet turned positive, and the 8-year-old GDP growth rate released on the same day has not yet turned positive. Monthly core inflation is likely to cool, so there is also reason to maintain dovish policy.
