Fed, analysts: full speed ahead on rates even after inflation figures
(Teleborsa) – Beyond today’s data on US inflationslowing down in June and more than expected, insiders are convinced that the Federal Reserve will continue on its path to raise interest rates in the United States.
The price trend announced by the Bureau of Labor Statistics (BLS), “should not call into question the 25bp rise in July, while doubts remain about the need for a further rise in September” he explains Antonio Cesarano, chief global strategist of Intermonte . “The news – underlines the analyst – is positive for consumption, which could lead the Fed to try to use all the technicalities of the case (for example the reverse repo rate and other), in order to be able to work more on the drop in liquidity and less on rates, thus keeping consumption under control and ensuring a declining inflation trend”.
If, on the one hand, we are witnessing the “slowdown in overall inflation, on the other the Fed will not be able to ignore the hike (albeit mild) of core prices and, in all likelihood, it will be called upon to continue its fight against inflation” – he explains Richard Flax Chief Investment Officer di Moneyfarm –. “After the pause in June, it is therefore expected – adds the expert – that in July the US central bank will resume the cycle of interest rate hikes with an increase of 25 basis points”.
Recent communications from FOMC officials, including Chairman Powell, suggest that another 25 basis point rate hike remains highly likely during the month. However, we are of the opinion that further hikes are by no means guaranteed and we are increasingly convinced that the hike in July will be the last one in the current cycle, before the rate cuts begin in the first half of 2024″, analysts from Ebury.