Raed Al-Khader, Head of Research at Equiti Group, said that the US inflation data released today came out better than expectations, “and therefore the Fed’s concerns about “sticky inflation or inflation that is slowly declining” have become non-existent.
Al-Khidr added, in an interview with Al-Arabiya, that the figures show that the US economy is strong, noting that “there is no real need for the Fed to continue to tighten monetary policy.”
The real surprise was in the last meeting, in which the Fed decided at the time that interest rates should be raised more in the coming period. Inflation declined significantly and approached targets, as the consumer price index fell by 1% in a month on an annual basis. Therefore, if the Fed raises interest rates by 25% A key point in the next meeting, so I think it will be the last,” according to Al-Khidr.
He continued, “The US Federal Reserve does not need to raise interest rates exaggeratedly, and that the market translated inflation data into the weakness of the dollar and the rise of gold.”
Raed believes that the Fed will use a moderate monetary policy, which is keeping interest rates at their levels until the first quarter of next year. And in the event that the reserve raises interest in two meetings until the end of the year, “I believe that it will accelerate the pace of reducing rates after that, in order to avoid a recession or economic contraction, which is still possible.”
The Labor Department said today, Wednesday, that the consumer price index (US inflation) rose 0.2% last month on a monthly basis, compared to 0.1% in May, driven by an increase in gasoline prices as well as rents, which offset the impact of the decline in used car prices.
In the 12 months through June, the consumer price index rose 3%, recording the smallest annual increase since March 2021, after an annual increase of 4% in May.
Economists had expected in a Reuters poll that the index would rise 0.3% in June on a monthly basis and 3.1% on an annual basis.
2023-07-12 17:16:29
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