Source: Bloomberg
Author: CATARINA SARAIVA
After the coordinated operation of many countries with the increase in financial system pressure, some central bank observers believe that the possibility of the Fed's suspension of interest rate hikes has increased.
Before the weekend, most economists also predict that the Fed will increase the benchmark interest rate by 25 basis points on Wednesday to 4.75-5%of the interval, which will continue to curb inflation for about one year.
But by the afternoon of Sunday, the Fed and the other five central banks announced their action to adjust the frequency of exchange operations from weekly to daily, thereby enhancing the liquidity of the US dollar swap arrangement, echoing other crisis periods adopted in the crisis periodAction.
After the news of Sunday was released, US stock futures and US debt yields initially increased, and investors also increased the betting of 25 basis points.Risk returns become more favorable.
"Global coordination with other central bank institutions to rescue financial institutions and maintain liquidity, which shows that the risk/return of suspending interest rate hikes is better," said Julia Coronado, former Federal Reserve economist Julia Coronado, president of Macropolicy Perspectives LLC.
She said that the central bank may suggest that "the current intention is to pay attention to the liquidity of stabilizing the banking system."
and about a week ago, the three US banks closed down, which basically excluded the possibility of 50 basis points in the Federal Reserve.idea.
Foreign concerns
Of course, whether the Fed will suspend interest rate hikes, it is still difficult to predict, and analysts have not immediately changed their predictions. They just said that the possibility of suspending interest rate hikes seemed to increase after the situation changes on Sunday.
Former Federal Reserve Director and Research Agency Monetary Policy Analytics Laurence Meyer and his colleagues said in a report on Sunday evening that multiple actions on Sunday "implied that concerns about the risk of spreading left tails rising to a certain extent to a certain extentIt may make us face more questions about the Fed's expectations on Wednesday. "
The bank's question, "they wrote.Vanessa Chan, director of fixed income investment in Fidelity International Asia, believes that the latest measures for swap arrangements may make the Fed more room for distinguishment to distinguish the stability of prices and financial stability.
Chan said in an interview with Bloomberg Radio in Hong Kong: "When starting to put various liquidity tools or liquidity buffer, the interest rate may continue to increase, thereby stabilizing the liquidity status we face in the market."
Fed officials will begin a two -day meeting on Tuesday.Given that the inflation remains strong, the labor market is still hot early this year, and some decision makers, including Powell, once hinted that after the last meeting on February 1, 25 basis points in interest rate hikes may besuitable.