Will Federal Reserve Raise Interest Rates 0.75% Or 1.00%? Here's What Analysts Are Saying Ahead Of Fed Meeting
The Federal Open Market Committee (FOMC) will announce whether it will decide to raise the federal funds rate in a statement on Wednesday, July 27 at 2:00 pm ET. This is how top analysts expect rate hikes.
FOMC meetings. The FOMC holds eight scheduled meetings throughout the year and holds more as needed.
The Federal Open Market Committee is the monetary policy arm of the United States Federal Reserve.
The FOMC sets the target rate for the fed funds rate at its meeting. The Federal Reserve Board of Governors sets the discount rate and reserve requirements.
Analysts' expectations. Below are the current rate hike expectations of major financial institutions shared by the Extraordinary Pope.
Related links: July Fed meeting preview. The Federal Reserve could tighten more than expected due to economic uncertainty
Why is this important? The consensus calls for a 75 basis point increase in interest rates to the fed funds rate. A rate hike of 100 basis points would be the biggest rate hike in 30 years. Earlier this month, Bank of America economist Michael Geppen said data on inflation and the labor market showed the US economy was overheating.
The bond market has priced in a 50/50 chance that the Fed will raise interest rates by 100 basis points, as Benzinga reported earlier this month. Cliff Hodge, chief investment officer at Cornerstone Wealth, believes the Fed has no choice but to remain aggressive given the growing likelihood of a US recession.
The Federal Reserve voted to raise interest rates by 75 basis points in June, with 11 members voting in favor of the decision to raise rates. Only one deputy voted for an increase of 50 basis points.
June's 75 basis point rate hike was the biggest rate hike in 28 years.
"Inflation remains high, reflecting pandemic-related supply-demand imbalances, higher energy prices and broader pricing pressures," the Fed said at the time.
With many expecting a rate hike on Wednesday, bond analyst David Rosenberg hinted that the Fed could surprise investors and analysts by choosing to trust the data and ignore future guidance.
"Watch the Fed abandon forward guidance and interest rate commitments and embrace reliance on data," Rosenberg said. “This climbing cycle will end tomorrow at 2:00 p.m. buy bonds.
SPY price action. The SPDR S&P 500 ETF (NYSE: SPY) rose 1.3% to $396.03 on Wednesday and has traded from $362.17 to $479.98 in the past 52 weeks.
The SPDR S&P 500 ETF was up 4.1% at the close on June 15 as the Fed raised interest rates 0.75%.
Photo courtesy of the International Monetary Fund on flickr
Komentar
Posting Komentar