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BOCHK: Mkt Expectations for Rate Cuts Sharply Cooled; Future Steps Depend on Inflation & Econ Performance
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The US Fed's decision to keep interest rates unchanged was in line with market consensus. Amy Cheung, head of Wealth Strategy and Insights Division of BOCHK, said that the recent rise in international oil prices has impacted potential inflation and the economy. The Fed Chair also stated that the impact of geopolitical events on the economy is still to be observed. After the monetary policy meeting, interest rate futures showed that the market quickly lowered the expectation of a 25-basis-point rate cut within the year to 58%, which is more conservative compared to the Fed's median expectation of one rate cut. However, Cheung believed that a rate cut is still possible within the year, with the key depending on the impact of oil prices on the US economy and whether the job market remains healthy. In the statement from the meeting, the authority has removed the previous description of the job market as 'solid,' indicating a less optimistic view than before. If the job market weakens, the Fed will need to balance controlling inflation and protecting the economy to determine future interest rate trends. AASTOCKS Financial News Website: www.aastocks.com |
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