UOB Group Senior Economist Alvin Liew and Rate Strategist Victor Yong review recent semi-annual testimony from the Fed ChairmanJerome Powell.
Key points
In his appearance before the Senate Banking Committee (March 7), FOMC Chairman, Jerome Powell, he was very tough warning that the process of recovery of inflation up to 2% has “a long way to go” and that the final level of interest rates will probably be higher than expected. He added that “the restoration of price stability will likely require the Fed to stay tight for some time.”
“Revisiting the Fed outlook: Terminal rate widens further and March FOMC is very closePowell’s latest testimony in Congress not only indicated that we are not near the end [del ciclo de ajuste]but rather that we may have underestimated when the Fed hikes will end. expecting the Fed to raise in the next two meetings in 25bp increments at the FOMC meetings in March and May 2023, but we also expect another two increases of 25 bp in the FOMC for June and July, which would place our terminal FFTR level at 5.50-5.75%. we continue expecting this terminal rate of 5.75% to be maintained until 2023. And while we are keeping our March FOMC rate hike forecast of 25 basis points unchanged, we note that this is now a very tight forecast, with increasing risk of a rise greater than 50 basis pointsaccording to changes in market prices”.
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.
