Svmuu News: Isabelle Mateos i Lago, chief economist at BNP Paribas, said, “If the July nonfarm payrolls figure is very strong—nearing or exceeding 130,000—then I think the July meeting will be full of suspense.Uncertainty may not be as high now, but in my view, Federal Reserve the case for a rate hike still holds.” Ahead of the July 4 holiday, the short-term interest rate futures market priced in a roughly 20% probability Federal Reserve of a rate hike at the July 29 policy meeting, down from 33% prior to the release of the nonfarm payrolls report.The market still expects Federal Reserve to raise rates by 25 basis points this year, but not until December at the earliest.
Regarding European Central Bank (ECB), Lago stated: “The baseline expectation remains that there will be another rate hike in September. But it is worth noting that Governing Council members speaking at the Sintra meeting did not rule out the possibility of skipping this additional hike.”She warned that it could take half a year or longer for energy supply conditions to normalize, and that inflation in the eurozone could accelerate again. Even so, she believes that consumer prices in regions other than those affected by energy issues will not face upward pressure. (Jinshi)