Poll: Wall Street banks see 2 more key rate hikes this year

New Straits Times - - Business | World -

NEW YORK: Wall Street’s top banks see two ad­di­tional in­ter­est rate rises this year from the United States Fed­eral Re­serve (Fed) and most ex­pect at least three more next year, a Reuters poll showed on Wed­nes­day.

These so-called pri­mary deal­ers, or banks that do busi­ness di­rectly with the Fed, were di­vid- ed, how­ever, on when they ex­pect the Fed to out­line its plans for trim­ming back its US$4.4 tril­lion (RM19.5 tril­lion) bond port­fo­lio.

Half the re­spon­dents see that hap­pen­ing by the end of this year, and the other half ex­pect the Fed to wait un­til next year or later to de­tail its bal­ance sheet res­o­lu­tion plan.

Fol­low­ing that an­nounce­ment, 16 of the 18 pri­mary deal­ers that re­sponded to the poll said they ex­pected the rate to rise to be­tween 1.25 and 1.5 per cent by the end of this year. Two saw the rate reach­ing to 1.5 to 1.75 per cent, which would in­di­cate three more hikes.

Look­ing into next year, 13 of 16 deal­ers of­fer­ing a forecast said the Fed would hike at least three times next year, with a me­dian year-end forecast of be­tween two and 2.25 per cent. Eight pre­dicted three hikes and five said the Fed would ac­cel­er­ate its pace to four in­creases next year.

The re­sults were largely in step with a poll of the same group of banks af­ter last Fri­day ’s stronger-than-ex­pected re­port on the US em­ploy­ment sit­u­a­tion.

It did mark a notable change from a poll one month ago when most deal­ers still ex­pected just two rate hikes this year, with none of them then fore­cast­ing a move at the Fed’s meet­ing this month. Reuters

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