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The
Federal Reserve on Wednesday said it was likely to hike interest
rates in March and reaffirmed plans to end its bond purchases
that month, surprising investors who had already braced for as
many as four rate hikes until the end of the year.
Analysts at Nomura, Japan's biggest brokerage and investment
bank, said they expect the U.S. Federal Reserve to hike its
benchmark rate by 50 basis points (bps) in March.
BNP Paribas expects as much as six 25 bps hikes in 2022 from
four earlier, and expects the fed funds target range at
2.25-2.50% at end-2023, 25 bps higher than a previous forecast.
"Our new base case for six hikes this year poses challenges to
our bullish outlook for US equities," the French bank's
strategists said in a note.
Fed Chair Jerome Powell did not rule out such a move when asked
about it after Wednesday's Fed meeting.
"He repeatedly appeared to differentiate the upcoming hiking
cycle from the last time the Fed normalised its policy rate at a
roughly quarterly pace," Nomura's analysts said in a note.
"We now expect a 50 bp rate hike at the March (Fed) meeting,
followed by three consecutive 25 bp hikes in May, June and
July," they said, adding that another 25 bp hike was expected in
December.
Fed funds futures, which track short-term rate expectations, are
now pricing in a total of 4.4 rate increases this year, up from
four expected hikes before Powell's news conference.
(Reporting by Tom Westbrook and Saikat Chatterjee; Editing by
Clarence Fernandez and Jon Boyle)
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