Wall Street Banks Raise Odds of Another Fed Rate Hike After Hawkish September FOMC
Summary
- The Federal Reserve’s September FOMC struck a more hawkish stance than expected, prompting broader Wall Street forecasts for an additional rate hike.
- Major banks including Goldman Sachs and Morgan Stanley have incorporated an additional Fed rate hike into their forecasts or scaled back the extent of expected rate cuts.
- The median market view calls for a 25-basis-point hike in the benchmark rate, though opinions are divided over the timing of the move.
Forecast Trend Report by Period
Wall Street is increasingly expecting another Federal Reserve rate hike after the US central bank struck a more hawkish tone than anticipated at its September Federal Open Market Committee meeting.
Walter Bloomberg reported on September 17 that Goldman Sachs, Morgan Stanley, NatWest, Rabobank, Swedbank and Commerzbank either built an additional Fed rate increase into their forecasts or reduced the extent of rate cuts they expect later.
The median view among market experts calls for one more 25-basis-point increase in the benchmark rate. Views are split, however, on whether the additional hike would come in October or December. One basis point equals 0.01 percentage point.
By contrast, Citi, ING and SEB maintained their existing forecasts that the September rate increase was the last hike in the current tightening cycle.
JH Kim
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