Next week, the FOMC will hold its two-day meeting. Market participants expect a 50 basis point rate hike. The analysts of Danske Bank they continue to wait for a hawkish message on the stance of monetary policy in 2023. They believe that the recent easing of financial conditions is premature and further hikes will be necessary.
“The US economy remains on a path of modest growth in the fourth quarter, and the Fed needs to force a moderate recession next year to avoid prolonging inflation from here. Lowering demand requires general financial conditions to tighten again, which which is likely to include a combination of more rate hikes in the first quarter, still high real long-term yields, and a stronger USD.”
“We recognize that our earlier forecast of a 75 basis point hike next week looks unlikely, but we don’t think the need for further tightening has gone away. We adjusted our forecast for the Fed, and now we expect a 50bp rise next week, followed by 50bp in February and 25bp in March. Therefore, we keep our forecast of a terminal rate of 5.00-5.25% unchanged.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
