HSBC's New Forecast on US Central Bank's Interest Rate Policy
HSBC anticipates that the Fed will raise interest rates at its September meeting, driven by strong resilience in the US economy and inflation data.
In line with the resilience shown by the US economy and developments in inflation data, HSBC has updated its expectation that the Federal Reserve will implement an interest rate hike at its upcoming meeting.
Interest Rate Hike Expectation
According to a note shared by HSBC economist Ryan Wang, the institution shifted its stance following the August employment report and CPI data that exceeded expectations. The FOMC is expected to decide on a 25 basis point interest rate hike at its September 15-16 meeting.
Future Projections
It is calculated that if this step materializes, the federal funds rate will rise to the range of 3.75 to 4 percent. The institution does not foresee a swift return to interest rate cuts following the steps to be taken for the remainder of the year.
Inflation and Institutional Forecasts
The fact that PCE and core PCE data remain distant from the Fed's 2 percent target continues to make inflation the primary source of concern. Other major financial institutions, Goldman Sachs and JPMorgan, similarly expect an interest rate hike from the Fed this week.