Six out of 10 global investment banks, "US interest rate freeze this year", one "cut"

According to a recent study, six of the world's leading investment banks have forecasted a halt in U.S. interest rate hikes, while only one has predicted a pause in the rate increases. The latest Bloomberg New York office report on the recent U.S. economic situation and assessments reveals that major investment banks such as Barclays, Goldman Sachs, and Morgan Stanley are expecting the halt in rate hikes, while Citigroup is anticipating a slight reduction.

Only Bank of America, JP Morgan, and Deutsche Bank are predicting a continuation of the rate hikes. The bank attributes this to the pressure from Federal Reserve Chair Kevin Warsh and other FOMC members to raise rates to curb inflation. The previous July decision by the Federal Reserve to freeze the policy rate range, with Warsh not explicitly expressing his support for rate hikes, has led to a general preference for financial easing among investors.

The next FOMC meeting to decide on the U.S. policy rate is scheduled for September. Given that the Federal Open Market Committee meeting to decide on the policy rate is set for the 27th of this month, the U.S. monetary flow expectations could be influenced by this. Currently, the market reflects a 1.1% expectation of an intra-year interest rate hike from the Fed, down slightly from 1.2% on July 6th.

The prospect of rate hikes remains higher compared to the July survey, with a projected 4.05% for next June (up from 3.97% in July). The New York office stated that while investment banks are reducing their expectations of rate hikes, they are maintaining a cautious stance on inflation.