trending Market Intelligence /marketintelligence/en/news-insights/trending/-NlD_DeTAiwGu0GH3rK7dw2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

IIF conference delegates doubt Fed will achieve rate hike goals

An interview with Antony Jenkins, Founder & Executive Chairman, 10x Future Technologies

An interview with Nicolas Veron, Economist, Senior Fellow at Bruegel

An interview with Dan Frumkin, CEO, Metro Bank

Investment Banking: The Outlook, Market Share and Competitive Advantage


IIF conference delegates doubt Fed will achieve rate hike goals

SNL Image

The U.S. Federal Reserve will restrain its interest-rate hiking policy in 2019, according to attendees of the Institute of International Finance's annual conference in Bali, Indonesia, on Oct. 12, although the market sell-off of equities earlier in the week suggests a rate rise in December is priced in by investors.

The U.S. stock market, long seen as overvalued by some market commentators, has slumped in recent days as equities are less valuable when interest rates rise. The Dow Jones Industrial Average shed more than 5% between late Tuesday and when markets closed on Thursday, before market started recovering on Oct 12.

The Fed's rate hiking policy drew the ire of President Donald Trump who, earlier this week, labeled the Fed "loco" in its measures to cool the booming U.S. economy, a move at odds with Trump's fiscal policy to accelerate growth.

The federal funds rate is forecast to climb to around 3.4% by the end of 2020, according to Fed officials, but attendees of the Bali conference were unconvinced.

"Definitely one [rate hike] in December, unless there's some sort of zombie apocalypse that stops everything," said Joachim Fels, managing director and global economic adviser of Pacific Investment Management Co.. However, he said the Fed will have to temper its hiking cycle in 2019, suggesting the Fed's dot plot is "a blue sky scenario" and there are "more potholes next year, so only two rate hikes next year."

SNL Image

Société Générale chief economist Michala Marcussen said the depreciation of the U.S. dollar in 2017 "probably canceled out 75 basis points" of Fed rate hikes, whereas this year, the dollar appreciation is amplifying what the Fed is doing. "A stronger dollar could refocus the Fed's mind," Marcussen said.

The recent sell-off in U.S. Treasurys occurred as the market appears to have been convinced that the Fed will raise rates again before the end of the year.

Randall Kroszner, a former board of governor member at the Federal Reserve System and now a professor of Chicago's Booth School of Business, said the Fed may be behind the curve, considering unemployment is below 4% and inflation is slightly above the 2% target. He expects at least a further two rate rises in 2019 despite the president's objections. "There's a long history of the Fed ignoring what the presidency says, and I think this will be a continuation of that," he said.

But Janet Henry, global chief economist at HSBC Holdings, said the Fed may even introduce rate cuts by the end of 2020. "Fed gets to neutral at the end of the year, goes slightly restrictive, the effects of the stimulus wear off. Rate cuts by the end of 2020," she said.