Kasikorn Research Center expects that the FOMC meeting on May 2-3 will raise the policy rate by 0.25% to 5.00-5.25%, which will be the last rate hike in this cycle. amid credit tightening as a result of banking problems and recent policy interest rate hikes which is expected to affect the US economy Slow down and may enter into a recession in some quarters in the future.
Although inflation continued to decline, it remained at a high level. In addition, the current strong labor market is still a factor supporting the Fed to continue to raise interest rates at the FOMC meeting on May 2-3, despite the US economy. will start to show signs of slowing down after GDP in 1Q/2023 grows 1.1% (Annualized QoQ), below the market expectation of 2.0% (Annualized QoQ).
This could be the last interest rate hike in this upward cycle. This will push the policy interest rate to the highest level of 5.00-5.25%, in line with the Fed Dot Plot released in the previous meeting. Although US inflation will remain at a high level But a significant slowdown in US inflation In addition, the direction of the US economy is weakening due to the impact of the Fed’s aggressive interest rate hike in the past. and credit tightening outlook amid risks from problems in the US banking sector It is expected that the Fed will give more weight to economic risks and consider stopping the policy rate hike after the upcoming FOMC meeting. That will cause the inflation trend to continue to decline to the target level of 2.0% in the future. While it would not cause an undue negative impact on the economy. to avoid hard landing
However, the direction of monetary policy going forward will depend largely on inflation and economic figures released. Given the slowing US economic outlook, it is possible that the Fed may need to cut interest rates this year.
By InfoQuest News Agency (01 May ’23)
Tags: FOMC, interest rate hike, policy interest rate, Kasikorn Research Center
2023-05-01 11:27:03
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