The Federal Open Market Committee (FOMC) of the US Federal Reserve will hold a meeting on September 20-21, where it will consider a further increase in the discount rate, which is at the highest level since 2018 of 2.25-2.5%.
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Most analysts expect the Fed to take new steps to tighten monetary policy, forecasting a 75 basis point hike to 3-3.25% following similar decisions in July and June. The key argument in favor of this is the high growth rate of consumer prices in the US at 8.3% in August, while maintaining the inflation target of 2% by the head of the Fed, Jerome Powell.
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At the same time, experts from the Japanese financial corporation Nomura Holdings do not rule out an increase in the discount rate by 100 basis points at once.
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“Materializing upward inflationary risks are likely to lead to a 100 bp increase in the Fed rate at the September FOMC meeting, against our previous estimate of 75 bp,” follows from the published analytical forecast of Nomura.
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A 1 percentage point increase would push the interest rate up to 3.25-3.5%, the highest since the 2008 financial crisis.
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Previously, the Fed had made such a one-time rate hike only seven times between 1978 and 1981 as part of efforts to combat US inflation, which exceeded 14% annually during 1980, according to a study by CFRA Research.
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According to market participants, such decisions of the US monetary authorities will have a negative impact on the US stock market.
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“We think a 100 basis point rate hike is unnerving Wall Street, as it would mean the Fed is overreacting to the data (on inflation – ed.), rather than sticking to its action plan,”. CFRA Research investment strategist Sam Stovall told.
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In addition, according to the expert, such measures can lead to the transition of the American economy into a full-fledged recession. US GDP is already declining for two consecutive quarters: by 0.6% on an annualized basis (if GDP grew at the same rate for four consecutive quarters) in the second quarter and by 1.6% in the first.
