06:45
More than half of economists expect the Fed to raise interest rates by the end of the year, Trump's call for rate cuts may have little impact on the Fed's decisionBlockBeats News, June 16th, A survey conducted by the Financial Times in conjunction with the University of Chicago Booth School of Business' Rustandy Center of 47 economists revealed that over half of the respondents expect the Federal Reserve to raise interest rates by at least 25 basis points by the end of 2026 to address the near 3.8% inflation level. This marks a significant reversal in market expectations compared to the majority of economists anticipating rate cuts at the beginning of March.
Despite the peace agreement between the United States and Iran, the potential reopening of the Hormuz Strait to navigation to ease energy price pressures, many economists believe that inflation will continue to transmit to the real economy, and high inflation may persist for a prolonged period.
The market broadly expects that the first FOMC meeting chaired by the newly appointed Fed Chair Powell will keep interest rates unchanged. However, with the U.S. labor market remaining robust and the economy showing resilience, internal Fed support for future rate hikes is increasing.
Joe Lavorgna, Chief Economist for the Americas at Sumitomo Mitsui Banking Corporation who previously served as an advisor to U.S. Treasury Secretary Mnuchin, stated that President Trump's continued calls for rate cuts will not influence Powell's policy decisions, as the interest rate path will ultimately depend on economic data.
Furthermore, the Financial Times survey revealed that nearly 70% of the surveyed economists believe there is a higher-than-normal probability of a more than 20% pullback in the S&P 500 index in the next year. They consider current tech stock, particularly the semiconductor sector, to be overvalued, indicating a structural bubble risk in the market.
