US FED to Lift Interest Rates by 50 Basis Points: Poll

Paigambar Mohan Raj
The FED now requires approval before state banks can issue, hold or transact crypto stablecoin payments, according to a press release today.
Source: Bankrate

After lower-than-expected CPI numbers for October, the US Federal Reserve might raise interest rates by 50 basis points, lower than that of previous months. The prediction was concluded according to a poll conducted by Reuters. However, the largest risks to the current outlook, according to analysts surveyed, are a longer period of U.S. central bank tightening and a higher policy rate peak.

According to 78 out of 84 economists surveyed by Reuters, the Fed will increase interest rates by half a percentage point, to a range of 4.25% to 4.50%. The FED’s policy meeting is scheduled to be held on December 13th and 14th.

The US Consumer Price index (CPI) fell to 7.7% for October, lower than the predicted 7.9%. The CPI reading had many expecting smaller rate hikes after four consecutive 75-basis-point increases.

Will interest rate hikes pause anytime soon?

Inflation predictions for this year and the following year are slightly higher than anticipated one month ago, according to the most recent Reuters poll, suggesting there is still time before a pause in the Fed’s tightening program.

In response to a follow-up question, 16 out of 28 respondents stated there was a greater probability that rates would peak later and higher than they now anticipate. Four others predicted higher and earlier, while the remainder predicted a lower and earlier time.

According to Philip Marey, senior U.S. strategist at Rabobank,

“While markets are focused on peak inflation, underlying inflation trends are persistent. This could force the Fed to keep raising the federal funds rate well into next year and beyond levels currently anticipated.”

Several Fed policymakers have indicated that rates will rise above their expectations from September. Furthermore, they will need to see a sustained and significant slowing in price increases before they will consider pausing the tightening process. Core CPI is currently running more than three times its 2% target. Inflation is not expected to revert to 2% until at least 2025, even though price pressures were gradually decreasing.

Therefore investors should not expect a pause in interest rate hikes anytime soon.