Fed Chairman Powell issued hawkish remarks, and the market expected the terminal interest rate to exceed 5%.

(Associated Press file photo)

[Financial Channel/Comprehensive Report] Following hawkish remarks by Federal Reserve Chairman Jerome Powell on Wednesday (2nd), investors and strategists are raising their expectations for the next rate hike, which is expected to be The interest rate at the end of the wave rate hike cycle will exceed 5%.

"Reuters" reported that the Federal Reserve's FOMC (Federal Open Market Committee) meeting on Wednesday raised interest rates by 3 yards (0.75 percentage points) as scheduled, pushing the benchmark interest rate to a range of 3.75-4%.

Fed funds futures ahead of the meeting had forecast a final rate of 5.02% around May next year, and since Wednesday, futures traders have raised their forecast for the final rate slightly, to a high of 5.14% in June 2023.

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After the Fed announced a rate hike, the market thought the policy statement was dovish, and the end rate forecast was once lowered to 4.96%.

But Powell's hawkish remarks after the meeting reignited market jitters and led to a hike in endpoint rate expectations.

Powell told a news conference at the time that it was too early to consider a pause in raising the federal funds target rate.

In its latest research note, TD Securities raised its endpoint rate forecast to 5.25-5.5% from the 4.75-5% range, and expects the Fed to raise rates by 2 yards (0.5 percentage points) at its December policy meeting .

TD strategists pointed out that the Fed statement and press conference paved the way for a slower pace of rate hikes in the future, but also indicated that the Fed's tightening policy still has some way to go, so the final rate may be higher than expected in September.

Economists at Nomura raised their end-point rate forecast by 0.25 percentage points to 5.5-5.75%, expecting a 2-yard rate hike in December; BNP Paribas strategists believe the Fed will rise again in December 3 yards, as inflation should continue through the end of the year.

The report pointed out that the federal funds rate will reach 5.25% in the first quarter of next year and remain at this level until 2023.

Barclays (Barclays) strategists said in a report that Powell's comments on Wednesday "suggested a higher endpoint rate", expect the rate hike cycle may be extended, but the high point remains unchanged, the policy rate target range is expected to reach 5-5.25%; Bank of America (BofA) strategists expect an increase of 2 yards in December, and the end rate at the beginning of next year will fall in the range of 4.75-5%. The Bank of America report pointed out that if the labor market maintains the same trend and curbs this trend Trends may require tighter monetary policy than currently anticipated, and the outlook may change.

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