Lin Qichao, chief economist of Cathay United Bank, predicted that the meeting of the central bank's board of directors and supervisors, which will be held on the 15th, is likely to raise interest rates by half a yard.

(Provided by Cathay Financial Holdings)

[Reporter Wu Xintian/Report from Taipei] Lin Qichao, chief economist of Cathay United Bank, predicted that the meeting of the central bank’s board of directors and supervisors, which will be held on the 15th, is likely to raise interest rates by half a yard, and then the interest rate hike will come to an end.

Cathay United Bank today issued its latest view on the global economy and market outlook for 2023.

Lin Qichao, chief economist of Cathay United Bank, analyzed that the first half of 2023 may be the most obvious stage of global economic downturn, and the risk of stock market correction is still there. Turn, the stock market sentiment is expected to gradually improve.

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However, he mentioned that the speed of improvement depends on three major challenges: although the pressure on the supply chain is gradually easing, uncertainties still exist; the pressure on global debt has no room for expansionary fiscal policy support; the monetary policy without QE will support the capital market. up?

Therefore, he believes that the stock and bond markets may not be able to reverse as quickly as before.

Lin Qichao explained that since 2022, inflationary pressures have accelerated the pace of interest rate hikes by the US Federal Reserve. In 2023, US interest rates may rise to between 5% and 5.25%. The rate hike ends in May.

Lin Qichao expects that the central bank will still raise interest rates. He pointed out that although the inflation rate is lower than 2.4%, the core inflation rate is between 2.8% and 2.9%. Therefore, the central bank should raise interest rates by half a yard, but it will come to an end unless There will be a big supply shock in the first quarter of next year, otherwise there should be no further interest rate hikes.

In terms of the stock market, Lin Qichao pointed out that there is still a risk of downward revision in early 2023. The world and the United States will inevitably enter an economic recession. In addition, the stock market is facing low evaluation and downward revision of corporate earnings. The stock market evaluation needs to wait for the inventory adjustment to improve before there is room for improvement. .

In the bond market, since the two-year bond rate in the United States is about 4.3%, short-term debt may be a good consideration if funds have a short-term mooring demand and the risk tolerance is low; while long-term debt is more focused on the possibility of launching after one year. Under the cycle of interest rate cuts, the U.S. dollar index is weaker than this year.

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