According to the latest Reuters survey released earlier this week, most economists unexpectedly reversed their forecasts and assessments, saying that the U.S. Federal Reserve (Fed) will raise interest rates by 25 basis points at its September meeting, taking the rate to 3.75%-4.00%. Notably, as many as 85% of the experts surveyed support this scenario after receiving new inflation data on Friday of the previous week; meanwhile, nearly 53% expect at least one more rate hike before the end of March next year.
This sudden shift in outlook suggests that persistent inflation pressure is forcing markets to abandon expectations of monetary easing. As Stephen Juneau, an expert at Bank of America, said, the Fed is now in a difficult position and can only stop tightening if economic data weakens significantly. Pushing back expectations of rate cuts has overturned the entire macroeconomic valuation that previously prevailed.
For traditional financial markets, the outlook of rates continuing to climb will strengthen the U.S. dollar and push yields on U.S. Treasury bonds higher. More expensive capital will directly pressure corporate cash flows and create a significant drag on the growth momentum of global stock markets.
For the crypto market, a tightening of liquidity conditions over the usual period often limits new capital inflows into risk assets such as $BTC . Investors should be cautious about the risk of sharp market volatility and prioritize risk management while monetary policy expectations remain in a complex state of change.
#Fed #InterestRates #MacroEconomy
This sudden shift in outlook suggests that persistent inflation pressure is forcing markets to abandon expectations of monetary easing. As Stephen Juneau, an expert at Bank of America, said, the Fed is now in a difficult position and can only stop tightening if economic data weakens significantly. Pushing back expectations of rate cuts has overturned the entire macroeconomic valuation that previously prevailed.
For traditional financial markets, the outlook of rates continuing to climb will strengthen the U.S. dollar and push yields on U.S. Treasury bonds higher. More expensive capital will directly pressure corporate cash flows and create a significant drag on the growth momentum of global stock markets.
For the crypto market, a tightening of liquidity conditions over the usual period often limits new capital inflows into risk assets such as $BTC . Investors should be cautious about the risk of sharp market volatility and prioritize risk management while monetary policy expectations remain in a complex state of change.
#Fed #InterestRates #MacroEconomy