Tuesday , November 24 2020

December hike + dovish message policy meeting rate. Two aspects of fear and fear – Finance | Without Chew Daily



Most analysts expect the Fed to raise interest rates from a range of 2.25% to 2.5% at a policy meeting ending on December 19. The financial market will continue to expect a 7 per cent hike.

Fed Powell Chair. (Photograph: AFP)

(USA New York, 14th) Over the last two years, the United States Federal Reserve (FED) has raised interest rates every three months, with one exception.

However, due to the expectation that the Fed will adopt a contingency strategy after the policy meeting later this month, the current slow and steady rate hike is likely to come to an end.

Most analysts expect the Fed to raise interest rates from a range of 2.25% to 2.5% at a policy meeting ending on December 19. The financial market will continue to expect a 7 per cent hike.

However, the dot dot map, the policy statement and the message from the Chairman of the Fed's Powell press conference will be more important than raising interest rates. Most analysts believe that these messages tend to be a disc. In March next year, the Fed may not raise interest rates, but most analysts believe that this will stop only interest rate suspensions, not the end of the tightening cycle, still rely on the economic situation.

Analysts said that President Powell's Fed will show that the Fed will not adopt the strategy to raise interest rates now by quarterly in 2017 and 2018. The Fed's dot matrix is ​​expected to forecast a second rate trip in 2019, down from three expectation in September

In addition, in the statement after the published meeting, the Fed may delete the "predicted wording that FOMC expects to be within the target range and further accelerations".

Bank of America said Merrill Lynch's analyst, Michelle Meyer, said Powell had to use the tone of market appeal, not to make people feel hawkish. Key words will be careful, patients, dangerous, and depending on the data.

If the federal tone is more modest, it will be clear evidence that decision makers are no longer adopting a strategy of actively raising interest rates.

The likelihood of the US economic recession rises
A reduction in interest rate is expected to fall

Economists interviewed by Reuters believe that the chances of the US economy coming into the recession have risen to 40% over the next two years. They also believe that the United States Federal Reserve next year expects a drop in interest rate hikes.

From the fear of a recession is that the US bond product curve is flatted – the gap between the two year and 10 year bond product has fallen to less than 10 base points. This is the smallest gap since the last recession in the United States.

Spreading the product curve suggests that investors believe that economic growth and inflation will be slow. In the last half century, the product curve has been reversed before almost every recession occurs.

The chance of recession has risen to 40%

According to the median estimate of respondents, the potential for a recession in the United States economy over the next two years has increased to 40%, the highest level since the issue was first proposed in May this year.

The latest survey interviewed more than 100 economic analysts during December 6-13. The results show that the US economy will slow down in the next quarters, and by mid 2020, the annual gross domestic product (GDP) will reach 1.8. %, about half of the latest public growth rate of 3.5%.

In the latest survey, analysts unanimously expected Fed to raise interest rates on December 19, but the general expectation for 2019 is to raise interest rates only twice, bringing the federal reserves rate to 2.75 to 3.00% by the end of next year.

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No Daily Chew / Finance ‧2018.12.14


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