After handing over a extensively anticipated seventy five bps hike for the fourth time in a row, Fed Chair Powell pressured the possibly want for greater fee rises even if the tempo slows. Economists at HSBC suppose the combine of factors – greater height prices and pushback on a pause – favours an extension greater in the USD rally.
Two greater 50 bps hikes
“The momentum in drivers of the USD bullish fashion considering mid-2021 (i.e. higher Fed height fee expectations, slowing international boom and hazard aversion) are sincerely waning. However, it is no longer but at the turning point. So, whilst it is terrific to appear for the height in the USD, we are probably now not pretty there yet.”
“The Fed has delivered the fourth seventy five bps hike in this cycle and has signalled there is nonetheless work to be done. The statistics will decide simply how plenty greater work that is.”
“We count on two greater fee hikes in December 2022 and February 2023, every of 50 bps, up to a top federal dollars goal vary of 4.75-5.00%, and notice that the dangers continue to be skewed in the direction of greater alternatively than decrease coverage rates, as US core inflation will in all likelihood stay extended properly into subsequent year. We additionally do no longer anticipate any fee cuts to be delivered in 2023 or 2024.”