© Reuters.
Investing.com – US news agency CNN said in a report on expectations of its next move on Wednesday that the bank could hike by 50 basis points.
And if that weren’t enough, the agency said, there are other central bank dramas investors should focus on.
High stakes
“Stagflation risks are seen as elevated in the US and UK for the next 12 months,” Deutsche Bank (ETR:) strategist Jim Reed said in a report on the bank’s investor survey on market outlook global for 2023.
The Deutsche (ETR:) Bank strategist added: “There is consensus that the next recession in the US will start in 2023.”
The main concern
The main concern is that the Fed and other central banks may not start pausing, let alone cut interest rates to try to stimulate the economy, until it’s too late, according to Reid.
Macroeconomic focus will shift from worries about Fed tightening to how severe the growth slowdown and profit shrinkage will be before global central banks hint at easing, said Tom Esay, founder of investment publication Sevens Report .
Market expectations
Experts expect the US Federal Reserve to begin easing the pace of interest rate hikes, starting in December, maintaining interest rate targets at 4.5% and 4.75%.
Interest rate futures indicate that traders expect the Fed to raise interest rates to around 5% by May 2023, up from the current range of 3.75% to 4%.
Economists are expecting a 50 basis point hike at their December 13-14 policy meeting, when Fed officials are also expected to release new key rate forecasts.
recession risks
Following the latest Fed meeting, Fed staff told officials at the meeting that their assessment of recession risk had risen to about 50-50, the first such warning since the central bank began raising rates. interest rates in march.
At its latest meeting, officials raised the key interest rate by 75 basis points for the fourth consecutive time, expanding the most aggressive tightening campaign since the 1980s to fight inflation that has hit a 40-year high.
Investors expect the Fed to hike interest rates by 50 basis points when it meets Dec. 13-14 and see rates peak at 5% by mid-2023.