Focus on the Fed's end-of-year meeting on interest rates How will the interest rate trajectory change?



(Economic Review) Focusing on the Fed's end-of-year meeting on interest rates How will the interest rate trajectory change?

China's news agency, Beijing, Dec. 17 (Xiabin) The Fed's recent move to "move from the eagle to the pigeons" has made the next Fed meeting on the final 2018 interest rate get a lot of attention.

Data Map: Federal Reserve Chairman, Powell. China News Agency reporter Deng Min photo

In early October, Fed Chairman Powell said, "We can go above the neutral level, but there may still be a long way to go before the neutral interest rate." At the end of November, Powell said interest rates are still somewhat lower than estimated. Sexual intercourse.

From "a long way to go" to "a little below," Powell's attitude changed drastically in over a month.

At the same time, many Fed officials have recently become wary about the upcoming upward trajectory, and by comparing the minutes of the Fed's November meeting on interest rates with September, it can be seen that it pays more attention to the negative impact of high in the economy.

Minneapolis Fed Chairman Kashkali said the Fed should now suspend interest rate hikes, and excessive interest rate rises could lead to a recession in the US economy.

Fawad Razaqzada, a technical analyst at the Jiasheng Group, told the China News Service that some US macroeconomic data was not as expected in the near future, and some Fed officials were cautious about prospects for economic expansion. At the same time, the Fed's cycle of rising interest rates was severely criticized by US President Trump.

The lead researcher at CITIC Securities' fixed income department clearly believes that the profound changes in the fundamentals of the United States are the real reason for the change in the Fed's attitude. In particular, it can be seen from previously reported US inflation data that while the US economy is still recovering, the road is not smooth. So it is inevitable that the Fed's attitude will become cautious.

The market expects the Fed to raise interest rates in December is a nail, but will the above situation leave expectations frustrated?

Former Fed vice chairman Fisher believes the Fed's interest rate increase should continue, but he does not deny that it should not raise interest rates in December. It is impossible to predict the slow pace of economic growth: the Fed should not continue to pressure the economy and wait until the beginning of next year or the first quarter to make new decisions.

"If you do not raise interest rates, the Fed is equivalent to a strong signal for the future interest rate outlook, that is, the Fed's interest level will be lower than the historical standard, or even lower than the recent forecast ".

Razak Zada ​​pointed out that with the pressure from Trump's criticism of the Fed's rate-high cycle, and based on recent fundamentals, the US central bank is likely to change its tide, which may trigger a sale of dollars . While the Fed's rate hike is expected to weaken next year, the current strength of the US economy means the Fed will continue to shrink its path in December.

Although the recently released non-farm employment report is lower than expected and previous employment data are also mixed, the market still sees the Fed's December rate rise as a high-probability event.

According to data from the Chicago Mercantile Exchange, Fed futures traders still believe the likelihood of a Fed rate increase in December is 83% but the likelihood of raising interest rates twice or more by 2019 fell sharply. Two-thirds of traders expect a 0 or 1 increase in 2019.

Morgan Stanley's chief economist, Ellen Zentner, believes that, based on weak economic growth expectations, the Fed is expected to raise interest rates only twice next year in March and June, after which interest rates will suspended. . When the economy accelerates again in 2020, the Fed will raise interest rates again.

Jiang Chao, chief economist at Haitong Securities, believes that the recent recovery in US inflation has slowed down. Many factors in the future may drag on US economic growth next year. The Fed is becoming more cautious in considering raising interest rates The pace of future interest rate increases will be based on the performance of economic data. More flexible decisions. While the likelihood of a rate hike in December is still high, it is likely to raise interest rates only once or twice in 2019, which means that the current cycle of US interest rate hikes may end early. (End)


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