Institutional analysts say the Federal Reserve may raise interest rates ahead of schedule, with the market focusing on the upcoming policy meeting
As the Federal Reserve's new monetary policy meeting approaches, the market has seen new trends in its judgment on the path of interest rates. Neil Dutta, chief economist of Pantheon Macroeconomics, a well-known Wall Street macro research institution, recently issued a report stating that although the market generally expects the Federal Reserve to raise interest rates in September, considering the current increase in inflationary pressure and the need for policy autonomy, the Federal Reserve does not rule out announcing an interest rate increase in advance at the policy meeting to be held on July 28. Datta said in an analysis report that in view of the hawkish stance displayed by Federal Reserve Chairman Kevin Warsh at his first meeting after taking office, as well as the steady labor market, high-intensity investment in the field of artificial intelligence, the geopolitical situation that has pushed up oil prices, and the continued inflation risks brought about by tariff policies, it is an inevitable trend for the Federal Reserve to raise interest rates in the future. Data show that although the U.S. inflation rate dropped to 3.5% in June, it is still significantly higher than the Fed's long-term goal of 2%. At the same time, the recent intensification of the situation in the Middle East has pushed international crude oil prices above US$100 per barrel, causing the yield on the 10-year US Treasury bond to rise to 4.7%, and market inflation expectations have once again heated up. Currently, the Chicago Mercantile Exchange's (CME) "Fed Watch" tool shows that the market expects the probability that the Fed will keep interest rates unchanged in July is 66%, while the probability of raising interest rates in September has risen to 57%. However, Data emphasized that raising interest rates earlier than expected in July would give the Fed greater policy initiative. He pointed out that if the Fed takes the initiative in July, it will not only effectively demonstrate its control over monetary policy, but also avoid falling into passive adjustments in subsequent months. This view echoes Yardeni Research President Ed Yardeni’s previous judgment that rising two-year U.S. Treasury yields may catalyze an interest rate hike in July. Analysts pointed out that since taking over from Powell as Fed chairman in May this year, Warsh has repeatedly emphasized the Fed's firm determination to fight inflation. The current target range for the U.S. federal funds rate remains between 3.5% and 3.75%. The trade-off between inflation trends and economic stability by the Federal Reserve management will become a key focus of this round of policy meetings. Open a futures account on Sina's cooperative platform, safe, fast and guaranteed