[HSBC No Longer Expects the Fed to Hold Steady This Year, Now Predicts Two Rate Hikes]
According to a report by Jinse Finance, HSBC now expects the Federal Reserve to raise interest rates by 0.25 percentage points in both September and December, revising its earlier forecast that rates would remain unchanged. HSBC U.S. economist Ryan Wang wrote in a report that following the release of the August jobs report and Consumer Price Index (CPI), both of which exceeded HSBC's expectations, the bank now anticipates that the Federal Open Market Committee (FOMC) will vote to raise rates by 25 basis points at its meeting on September 15-16. This would bring the federal funds target rate range to 3.75%-4%. "We believe the FOMC's new dot plot may show a median forecast of 4.125% by the end of 2026, reflecting (at least for many policymakers) a tendency to implement consecutive 25-basis-point rate hikes at the October 27-28 and December 8-9 meetings." Given the strong momentum of U.S. economic growth, HSBC expects that after this year's rate hikes, the Fed will not quickly pivot to rate cuts. (Bloomberg)
