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On Wednesday evening, the US central bank (Fed) presented the minutes from the interest rate meeting held three weeks ago. The Fed then stated that the interest rate should be kept at a level of 5.0-5.25 percent.
Although the decision was unanimous, several are said to have advocated an interest rate increase. The minutes show that the Fed landed on a pause due to uncertainty related to economic growth. With ten straight interest rate hikes, the rise has been the steepest since the 1980s, and the interest rate, as you know, seems to be lagging behind.
However, according to the minutes, all of the members of the interest rate committee expressed that it would be right to have more interest rate hikes, but not at the same rapid pace. With the help of several increases of 0.75 percentage points and 0.5 percentage points, the central bank has taken the interest rate from zero to five percent in just over a year.
A still tight labor market and upside risk to inflation are some of the things that are highlighted as arguments for further tightening. In connection with the June meeting, the Fed presented new estimates for the future interest rate setting, which entailed two further interest rate increases from the current level, i.e. to the range of 5.50-5.75 per cent.
Currently, the market is pricing in a 90 percent probability that interest rates will be raised by 0.25 percentage points to 5.25-5.50 percent at the interest rate meeting on July 26, according to CME Group’s overview. There is also a certain probability that the interest rate will be raised a further notch at one of the subsequent interest rate meetings.
– There was a broad consensus about a June pause, but almost everyone expects a further increase in 2023. Unless the economy really falls apart in the next few weeks, there will definitely be another increase from the Fed in July, says chief economist Marius Gonsholt Hov at Handelsbanken.
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The market did not react significantly to the report. Market interest rates rose marginally, while the broad stock market fell slightly.
– Having said that, the market has moved more in the direction of there actually being two more hikes from the Fed – as the central bank has guided towards – and we won’t be far back before the market had more doubts about the Fed’s interest rate plans.
Chief economist Marius Gonsholt Hov. (Photo: Fartein Rudjord) More…
Higher American interest rates can mean higher Norwegian interest rates, says the chief economist.
– In isolation, the pressure on Norges Bank is maintained. The interest rate peak has not yet been fully reached among Norway’s trading partners, and that holds up the interest rate outlook here at home as well, says Hov. (Terms) Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For further terms see here.
2023-07-05 18:33:45
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