According to recent expectations, the U.S. Federal Reserve is expected to raise the lending rate by 25 basis points (bps) to 5.25% in three days. A poll of 105 economists showed that 94 of them predict a 25bps rate hike during the May 2-3 Federal Open Market Committee (FOMC) meet...
According to recent expectations, the U.S. Federal Reserve is expected to raise the lending rate by 25 basis points (bps) to 5.25% in three days. A poll of 105 economists showed that 94 of them predict a 25bps rate hike during the May 2-3 Federal Open Market Committee (FOMC) meeting. While a rate hike in May is anticipated, economists believe it will be the last one in 2023, with the majority expecting the rate to remain at 5.25% for the rest of the year.
Market observers expect benchmark interest rate increase
Uncertainty surrounding additional hikes beyond May
Michael Gapen, the chief U.S. economist at Bank of America (BOFA) Securities, commented that there is still much work to be done before the 2% target is achievable. Gapen also expressed uncertainty about whether the Fed will increase the benchmark rate after May.
“On the data front, despite the slowdown in inflation in March, there is still a lot more work to be done to get back to the 2% target. We maintain the first rate cut in March 2024. Should the stresses in the financial system be reduced in short order, we cannot rule out that stronger macro data will lead the Fed to put in additional hikes beyond May.”
Michael Gapen