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Fed’s excessive interest rate hikes increase the likelihood of US recession = market participants | Reuters

The U.S. Federal Reserve (Fed) is raising interest rates too much and the U.S. economy is likely to enter a recession, strategists and fund managers told Reuters’ Global Market Forum (GMF). Stated. (2022 REUTERS/Brendan McDermid)

[28日 ロイター] – The U.S. Federal Reserve (Fed) hikes interest rates too much and the U.S. economy is likely to enter a recession, strategists and fund managers told Reuters’ Global Market Forum (GMF). said in

“The biggest risk is that the Fed will tighten too much as inflation tends to react much slower to rate hikes,” said Nick Brooks, head of economic and investment research at the ICG. “Especially during a rate hike cycle where the economic distortions from the pandemic are not yet fully understood.”

In the U.S. short-term interest rate futures market, many still believe that the Fed will decide to raise interest rates by 0.75 percentage points for the fourth consecutive meeting at next week’s Federal Open Market Committee (FOMC) meeting, but after that, the FOMC meeting in December will see a 0.75 percentage point hike. 50 percentage points, and the next two FOMC meetings are expected to raise interest rates by 0.50 percentage points or less.

But Fed officials won’t slow down unless there’s hard evidence that inflation is slowing, said the head of JPMorgan Asset Management’s Global Fixed Income, Currencies and Commodities Group (Asia ex-Japan). Mr. Jonathan Liang said.

“There is a more than 50% chance that the U.S. will enter a recession next year,” Rian said, adding that the current strength of the U.S. labor market and consumer balance sheet “gives the Fed plenty of room to continue raising interest rates. “

September’s Personal Consumption Expenditure (PCE), announced by the US Department of Commerce on the 28th, increased by 0.6% from the previous month. This surpassed market expectations of a 0.4% increase. The figure for August was revised upward to 0.6% from the previous 0.4% increase.

Alex Gurevich, chief investment officer at Hongte Investments, said the Fed is holding off on changing its stance to a more dovish stance as it now focuses on strong consumer-driven economic data. But a recession could be a headache for policy, he said. “If you look at stocks and asset prices, you can see that expectations of Fed easing are already priced in right now.”

With the Bank of Canada slowing its pace of rate hikes, some speculate the Fed will follow suit, but Anita Gupta, head of equity strategy at Emirates NBD, said the Bank of Canada would He said it was “too early” to conclude that other central banks would follow suit.

“If you hit the accelerator while going downhill, it becomes very difficult to stop. It may already be too late to stop the deflation and recession cycle,” said Gurevich at Hongte.

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