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9 Jun 2023

International Economy

FOMC meeting, June 13-14, 2023: Fed officials may not be unanimous in holding the policy rate at 5.00-5.25% (Business Brief No.4007)

คะแนนเฉลี่ย

        We at KResearch expect that the Federal Reserve (Fed) may keep its policy rate steady at 5.00-5.25 percent during the Federal Open Market Committee (FOMC) meeting, June 13-14, 2023. Its resolution, however, will not likely be unanimous this time around, pending an assessment of the economic and inflation outlook following steeper rate hikes seen over the year. Although inflation rate in the US remains high amid the robust labor market, inflation overall has begun to ease gradually while the labor market has shown signs of a slowdown amid the increased risk of the US banking sector, which have led to credit tightening. Additionally, steeper rate increases over the year will substantially hurt the US economy going forward as a result of the lag time of the implementation of its monetary policy.
        It is expected that the US economic growth forecast and Fed Funds rate outlook, which reflects the Fed’s future monetary policy stance, will be disseminated at the upcoming FOMC meeting. If the US economic and inflation outlook differs from its prior estimate, the Fed still has the flexibility to alter its future monetary policy. We at KResearch are of the view that the Fed will likely keep its policy rate unchanged at the upcoming FOMC meeting, June 13-14, 2023, although it may not rule out any rate hikes at the subsequent FOMC meetings if needed, given the fact that inflation may surge again amid volatile global oil prices. However, if inflation declines gradually, the Fed may hold its policy rate at 5.00-5.25 percent until the end of 2023. At this time, markets largely view that the Fed may not cut its policy rate during 2023 as the US economy has not shown signs of a significant slowdown, as compared to the prior estimate.

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International Economy

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