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2 Feb 2023

Econ Digest

The Fed decided to raise its policy rate by only 0.25% as expected at the FOMC meeting on January 31 - February 1, 2023

คะแนนเฉลี่ย

        At the FOMC meeting on January 31 - February 1, 2023, the U.S. Federal Reserve (Fed) decided to raise its policy rate by only 0.25% as expected, pushing the policy rate to 4.50-4.75%. However, the Fed has signaled that it will not stop raising its policy rate in the near term and may continue to raise its policy rate more than the market expectation of 1 time. The Fed views that although inflation has eased, it is still high.

        However, after the meeting, the U.S. stock market rose while the dollar weakened as the Fed’s statement was not strong enough, leading the market to believe that the Fed may stop raising its policy rate in the near term or raise its policy rate just one more time at the next meeting.

        Kasikorn Research Center views that the future path of the Fed’s policy rate will depend mainly on inflation and economic data released. If inflation continues to weaken and the U.S. economy slows down, the Fed may raise its policy rate just one more time, which would push the U.S. policy rate to the high level of around 5.0% as the market expects.

        However, if the rate trend does not proceed as expected by the market and the Fed continues to raise its policy rate further, the money market and the capital market may face volatility in the future.

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Econ Digest