What experts say about US Fed rate hike

Federal Reserve Chairman Jerome Powell said on Wednesday that the failure of the US government to raise the debt ceiling would be unprecedented and would have a highly uncertain and negative impact on the economy. Powell also said that the Fed still views inflation as very high, and that it is too early to say that the rate hike cycle is over.

experts take

Franklin Templeton CEO sees Fed looking at private loan demand

Franklin Templeton President and CEO Jenny Johnson said private loans will continue to grow as the banking system – buoyed by the pace of the Federal Reserve’s interest rate hikes – pulls back on lending.

He said, ‘The speed with which the rates have increased has increased the pressure on the banking system.’

Jay Woods, Chief Global Strategist, Freedom Capital Markets

Woods said the storm clouds still remain, Powell gave us what we expected, but he didn’t really give investors the language that says everything is clear and the going is smooth going forward. The regional banking crisis is not over. Despite what Powell said, he didn’t give us any guidance on what the Fed’s next move would be or an “all clear” signal. He didn’t panic about regional banks, but he didn’t reassure investors either.

Eric Winograd, senior US economist at AllianceBernstein

Winograd made it clear, the Fed still has a tightening bias: They will need confirmation from data that the monetary policy stance is restrictive enough. This confirmation will eventually take the form of slower inflation, weaker job growth and/or weaker credit activity from the banking sector. Meanwhile, they are still talking about a possible rate hike, which they currently see as more likely than a rate cut. However, at least in the interim, the Fed believes they may have done enough to bring inflation back down over time, which is in line with expectations shown in the dot plot released in March.

Zhiwei Ren, portfolio manager at Penn Mutual Asset Management

rain Said the rate decision meets market expectations – it leans a bit on the hawkish side as there is no sign of a pause.

Matt Maley, chief market strategist at Miller Tabak + Company

Maley said it was interesting that he contradicted what Fed staff said in the beige book, but it was also interesting that he didn’t say they were wrong.

He said what I would have expected when he said a mild recession was possible, but didn’t see a major one. The Fed Chair never acknowledges a full recession unless we’re already in one.

Lindsey Rosner, Multi-Sector Portfolio Manager at PGIM Fixed Income

Rosner said our view is for a technical downturn, the question mark is when, but Q3/Q4 is likely. If the only framework Powell is operating under is modest growth, not recession, then that would suggest he needs to change course if he sees a recession. So we believe they will have to make cuts.

Torsten Slok, Chief Economist, Apollo Global Management, on Bloomberg TV

Slok said it still has an incredible laser focus on inflation. And I think that rounding number inflation at 5% is still a lot higher than the 2% target. So they’re still looking in the rearview mirror and saying: “We don’t know yet how bad this banking crisis is going to be and we don’t know yet, therefore, how tight credit conditions are going to be. “

Adam Phillips, Managing Director of Portfolio Strategy at EP Wealth Advisors

Phillips said that despite some arguments to hold off on this meeting, Chair Powell once again received unanimous support for a 25 basis point increase.

Future policy decisions likely won’t be clear, and the Fed is keeping its options open for now.

Gina Bolvin, President of Bolvin Wealth Management Group

Bolvin said Powell apparently thinks the economy is strong enough to continue tightening. Importantly, the vote was unanimous.

Sonia Meskin, Head of US Macro at BNY Mellon

Meskin said (Powell’s) data assessment broadly reflects the outlook for limited success on the inflation/labor market front, but more work remains to be done, either to keep policy tight for a while or if inflation The rate of interest does not come down widely and if financial conditions are there to raise rates further. Granted, of course he wouldn’t say the latter outright.

Whitney Watson, Global Co-Head of Fixed Income and Liquidity Solutions and Co-CIO at Goldman Sachs Asset Management

From a strategic perspective, we think there is room for further relaxation of market-linked pricing for policy easing later this year, Watson said. Structurally, we think a world of higher yields and greater uncertainty makes a strong case for investors to restore their allocation to high-quality core bonds.

(with inputs from Bloomberg)