Barclays forecasts Fed to stand pat on rates in January By Reuters

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© Reuters. FILE PHOTO: An eagle tops the U.S. Federal Reserve building’s facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst

By Subhadeep Chakravarty

(Reuters) -Barclays said on Wednesday it no longer expects the U.S. Federal Reserve to raise interest rates in January, compared with an earlier forecast of a 25-basis-point hike.

Rates will remain unchanged until December next year, the brokerage said.

The brokerage expects the U.S. central bank to start trimming rates by 25 bps every other meeting after the end of next year, and that would bring the Fed funds’ target range to 5.00%-5.25% at the end of 2024 and at 4.00%-4.25% by 2025-end.

“We continue to think, however, that risks are tilted to the upside, with rate hikes likely in 2024, if progress on disinflation stalls,” economists at Barclays led by Marc Giannoni said.

Fed officials agreed at their last policy meeting that they would proceed “carefully” and raise interest rates only if progress in controlling inflation faltered, the minutes of the Oct. 31-Nov. 1 gathering showed on Tuesday.

While several Wall Street banks already signaled the Fed’s likely halt in rate hikes, Barclays had decided to stand apart, maintaining its outlook of another rate increase in January 2024 – until this shift in stance.

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