MAS to slightly reduce slope of S$NEER policy band to around 0.5 pct at the upcoming semi-annual policy meeting, says Scotiabank
Weak U.S. growth outlook provides Fed flexibility to offer more “insurance” rate cuts, says ING Economics
RBI likely to lower policy rate again on Friday as India struggles to get growth back on track, says Scotiabank
RBI likely to adopt further 50bps of cumulative cuts going forward; policy statement remains dovish: ANZ Research
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U.K. headline inflation remains unchanged at 1.7 pct in September, likely to stay below 2 pct in near-term
Fed’s dovish stance and balance sheet re-expansion likely to weigh on dollar in months ahead, says Scotiabank
Fed Hike Aftermath Series: Hike odds jump suggests market worrying over inflation
Last week, the media focus was largely on UK inflation report, followed by Bank of England’s (BoE) rare guidance on rates and less attention was paid to the market pricing of hike bets. The financial market’s pricing of hike probability clearly shows the investors are becoming increasingly nervous over inflation. The chart shows how the hike bets evolved dramatically in just matter of days.
On September 8th, the financial market was pricing 68 percent chance that Federal funds rate will remain at 1.125 percent or lower. The market was pricing next hike to be after H1 2018. However, after UK inflation report, showing August inflation quickened to 2.9 percent with core inflation at 2.7 percent was released, followed by U.S. inflation report showing inflation quickening to 1.9 percent in August, the financial market sharply corrected its hike forecast.
The market is currently pricing 56.9 percent chance that the next hike from the Fed will be in December and that is despite dovish commentaries from several FOMC policymakers. This clearly indicates that the market is becoming concerned over inflation and discounting dovish views from the rate-setting committee.