What Canada’s ‘surprise’ interest rate hike means for the Fed

“The Fed is likely to come to the same conclusion… It could raise interest rates to 6%.”

(New York = Yonhap Infomax) Reporter Yoon Young-sook = Contrary to market expectations, the Reserve Bank of Canada, following Australia this week, began an unexpected interest rate hike.

Fed Chairman Jerome Powell
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Because of this, US financial market participants also began to worry that an unexpected increase in the interest rate could take place at the regular meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve System (Fed) scheduled next week.

Interest rate hikes in Australia and Canada are complicating the situation for US investors ahead of the Fed break that fueled the stock market rally, Navellier & Associates founder Louis Naveli said Monday, MarketWatch reported.

Australia and Canada “raised interest rates even as they face a slowdown from ongoing inflationary trends,” he said.

“The Fed may come to the same conclusion, and it is estimated that a rate of 6% will be needed to slow the economy enough to reach the actual inflation target of 2%,” said Nabellier.

Jeffrey Kleintop, global investment strategist at Charles Schwab, tweeted that “Canada raised rates today by 25 basis points after the January pause, just after the Reserve Bank of Australia (RBA) raised rates by 25 basis points after the pause in April.” Even if you interpret the comments of the US and officials as you wish, if the data calls for it, central bank officials will reverse everything they say and ignore it. “

This means that if the indicators support an additional hike, he can reverse his comments and support an additional hike.

According to the Chicago Mercantile Exchange (CME) FedWatch, the US interest rate futures market sees a 69% chance that the Fed will keep the benchmark rate unchanged at its June meeting, and a 31% chance of to rise by 0.25 percentage points.

This is an increase in the possibility of an interest rate rise compared to 78.2% and 21.8% the previous day.

Investors in the interest rate futures market also raised the possibility of further increases after Canada’s unexpected rise.

US Treasury yields rose after Canada’s interest rate hike, while US stock indexes declined, led by technology stocks.

This article was submitted at 03:23, 2 hours earlier on the Infomax financial information terminal.

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