Rabobank: The Federal Reserve may raise interest rates by 25 basis points in May and keep them unchanged

According to reports, Rabobank believes that the Federal Open Market Committee (FOMC) unanimously decided yesterday to raise the federal funds interest rate target range by 25 basis points from 4.50-4.75% to 4.75-5.00%. Rabobank economists rejected their expectations of a 25 basis point interest rate hike in June. however, They still believe that the Federal Reserve will maintain interest rates unchanged for the rest of the year: “Next, the FOMC does not want to raise interest rates too much, and it is expected that only another 25 basis points will be added this year. The FOMC expects that tightening bank credit will complete the rest of the central bank’s anti inflation work. You can realize in the Fed Chairman Powell’s Q&A session that credit tightening is the Fed’s new monetary policy tool. We have lowered our forecast for the target range of the federal funds interest rate from 5.25-5.50% to 5.00-5.25%, and it is expected that only another 25 basis points will be added once. We firmly believe that “Hold the forecast that FOMC will not turn this year.”

Interpretation of this information:

Rabobank’s economists believe that the Federal Open Market Committee (FOMC) has decided to increase the federal funds interest rate target range by 25 basis points. The current range of 4.50-4.75% has been raised to 4.75-5.00%. The bank had earlier rejected the possibility of a 25 basis point increase in June, however, it believes that the Federal Reserve will not change the interest rates for the remainder of the year. The FOMC is not keen on raising the interest rates too high and has decided to use tightening bank credit as a tool to control inflation. Rabobank has adjusted its forecast for the target range of the federal funds interest rate from 5.25-5.50% to 5.00-5.25%. The bank firmly believes that the FOMC will not turn this year.