25 Jul 2022
International Economy
It is expected that the US Federal Reserve (Fed) will raise its policy rate by another 0.75 percent at the upcoming Federal Open Market Committee (FOMC) meeting slated for July 26-27, 2022. The latest inflation figure for June hit a record four-decade high of 9.1 percent YoY, prompting the Fed to place more weight on the inflation risk. The likelihood that the Fed will raise its policy rate by 1.0 percent looks slimmer than a 0.75 percent rate hike at the upcoming FOMC meeting because it would be the steepest rate increase in more than four decades, thus triggering market jitters if the Fed did so. Additionally, markets would view that the Fed might be overly concerned about inflation and that inflation might not be manageable, hence prompting the Fed to implement a more aggressive rate hike than previously signaled. For this reason, the Fed may have to weigh the potential impact of its aggressive policy tightening drive. ... Read more
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30 Apr 2022
As previously signaled, it is expected that the Federal Reserve (Fed) will raise its policy rate by another 0.50 percent at the upcoming Federal Open Market Committee meeting, May 3-4, 2022, with the aim of combating elevated inflation. The Fed may continue to place emphasis on maintaining price stability amid accelerating inflation. ... Read more
14 Mar 2022
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21 Jan 2022
Amid the persistent acceleration of inflationary pressure and the fact that the US is on the cusp of full employment, it is expected that the Fed will begin its interest rate hike in March 2022 as signaled by many Fed officials. However, supply chain bottlenecks and labor shortages in the US will unlikely ease over the short term. Moreover, global oil prices that are projected to remain at elevated levels amid tight supplies and risks, arising from geopolitical issues among large oil producing nations, will likely cause the US inflation rate to remain at a high level. Meanwhile, a robust recovery has been seen in the US labor market. In December 2021, unemployment fell below 4 percent, to 3.9 percent, reflecting that the US labor market is approaching full employment while the impact of the COVID-19 Omicron variant on the US labor market is expected to be short-lived, meaning that the overall US workforce remains solid. ... Read more
16 Dec 2021
At the latest Federal Open Market Committee (FOMC) meeting, the US Federal Reserve (Fed) announced that it will double the rate at which it reduces monthy asset purchases (QE tapering program), meaning that the process will end by March 2022. The Fed also signaled three rate hikes next year to cope with high-flying inflation while the labor market is approaching full employment. ... Read more
14 Dec 2021
Amid rising inflationary pressures, the Fed could increase the pace of its QE tapering and raise the policy rate much sooner than previously expected. The United States’ inflation rate continues to surge, with the headline inflation rate, gauged by the consumer price index soaring to a new high in almost 40 years at 6.8 percent YoY, in November 2021. Supply chain bottlenecks and labor shortages in the US, which are unlikely to be resolved in the near future, give the impression that the US inflation rate will remain high throughout the forthcoming period.... Read more
30 Oct 2021
The upcoming Federal Open Market Committee (FOM0C) meeting, November 2-3, 2021, is seen as an important policy gathering because the Fed is expected to officially announce its QE tapering program after sending signals that it would begin to do so by the end of 2021 and complete the process by mid-2022. This means that the Fed will likely start to gradually scale back its asset purchases at USD15 billion a month, which comprises the reduction in government bond purchases by USD10 billion a month, from the current purchase amount of USD80 billion a month. Additionally, it will cut its purchases of mortage-backed securities at USD5 billion a month, versus the current purchase limit of USD40 billion a month. As a result, the Fed is expected to complete its USD120-billlion a month QE tapering by mid-2022 as signaled. ... Read more
21 Sep 2021
We, at KResearch, asssess that the Fed will continue to maintain its policy rate within a range of 0.0-0.25 percent, and may not announce its QE tapering program at the upcoming Federal Open Market Committee (FOMC) meeting, slated for September 21-22, 2021. The US central bank may also keep its view on QE tapering unchanged as markets have alrady priced in that the program will begin towards the 2021 year-end. At the upcoming FOMC meeting, the Fed is expected to send signals via its statement that it has a cautious view towards the US economic recovery after several economic indicators have perfomed well below its prior estimates amid the COVID-19 pandemic and supply chain bottlenecks that continue to pressue the US economic recovery. However, it is expected that the Fed is still upbeat about the overall US economic performance due to its steady recovery momentum that will likely meet the Fed’s set target.... Read more
26 Jul 2021
KResearch assesses that the Federal Reserve (Fed) will likely keep its policy rate steady at 0.0-0.25 percent at the upcoming Federal Open Market Committee (FOMC) meeting, July 27-28, 2021, as the US labor market has yet to fully bounce back, and the number of unemployed remains substainally higher than pre-COVID-19 levels. Although the Fed is facing increased inflationary pressure, it is expected that it will give more weight to the economic recovery and maintain its accommodative monetary stance until at least the end of 2021. ... Read more
13 May 2021
US inflation surged above market forecasts in April 2021. Headline inflation rose 4.2 percent YoY, its highest level since September 2008. Meanwhile, core inflation reached 3.0 percent YoY. Such increases were driven by improving domestic demand following accelerated vaccination efforts and continuous issuance of stimulus packages. On the other hand, supplies were threatened by shortages of goods and raw materials for manufacturing amid a supply chain bottleneck and rising commodity prices, especially fuel prices, which has led to the spike in inflation.... Read more
26 Apr 2021
KResearch projects that the Federal Reserve (Fed) will maintain its policy rate within the range of 0.0-0.25 percent at its meeting on April 27-28, 2021. While the US economy has shown signs of recovery following expedited vaccination efforts, with business activities able to return to normal amid the consistent release of stimulus packages, the labor market will likely need much more time to achieve full recovery per the Fed’s target. Overall, more than 17.4 million people have applied for unemployment benefits. While the COVID-19 situation has somewhat eased in the US, the risk of new outbreaks remains. Many countries continue to experience new outbreaks as well as the emergence of newer COVID-19 variants. Taking into account the fragile labor market and existing risk factors, the Fed is expected to maintain quantitative easing (QE) measures to support the US economic recovery.... Read more
16 Mar 2021
KResearch assesses that the US Federal Reserve (Fed) will likely maintain its policy rate at 0.0-0.25 percent during the upcoming FOMC meeting that is slated for March 16-17, 2021. Although the US economy exhibits signs of recovery, it may take a while to fully bounce back, thus prompting the Fed to keep its policy rate at near zero and continue its USD120 billion per-month asset purchases, with the aim of supporting the US economic recovery. Meanwhile, the US inflation rate is set to accelerate as a US economic recovery is underway. However, as the inflation rate may not exceed 2 percent, the US central bank will unlikely withdraw its monetary stimulus measures to slow an overheated economy should it occur.... Read more
25 Jan 2021
KResearch projects that the Federal Reserve (Fed) will keep the US policy rate within the range of 0.00-0.25 percent, without announcing any additional monetary easing tools, at the upcoming Federal Open Market Committee (FOMC) meeting to be held on January 26-27, 2021. While the Fed is expected to signal further easing of monetary policy, it will still emphasize the necessity of expediting issuance of fiscal measures under the new US government headed by President Joe Biden. Both monetary and fiscal measures will be instrumental towards limiting risks and supporting the recovery of the US economy over the upcoming period.... Read more
9 Dec 2020
KResearch projects that the Federal Reserve (Fed) will keep the US policy rate within the range of 0.00-0.25%, and it is unlikely that the Fed will announce any additional tools for quantitative easing (QE) at the Federal Open Market Committee (FOMC) meeting to be held on December 15-16, 2020. ... Read more
30 Oct 2020
We at KResearch assess that the US Federal Reserve (Fed) will likely keep its policy rate steady at 0.0-0.25 percent during its FOMC meeting slated for November 4-5, 2020 because the US economy has begun to rebound, thus lessening its pressure to cut the Fed Funds rate further. In addition, the Fed changed its longer-run goals and monetary policy strategy in August 2020 while also sending signals to maintain the Fed Funds rate at near zero until at least 2023. ... Read more
14 Sep 2020
KResearch has assessed that the Federal Reserve (Fed) will continue to keep interest rates in a range of 0.0-0.25 percent at the next Federal Open Market Committee (FOMC) meeting which will be held on September 15-16, as the Fed is thought to have already used all the tools necessary to sustain the US economy. Recently, the Fed adjusted its policy rate downward to near zero percent and continuously implemented Quantitative Easing (QE). ... Read more
2 Sep 2020
Mr. Jerome Powell, the US Federal Reserve chairman, announced a major monetary policy shift at the latest Jackson Hole conference (August 27, 2020). The Federal Open Market Committee (FOMC) reached a unanimous decision in approving longer-run goals and monetary policy strategy adjustment. The shift to flexible average inflation targeting from the original fixed inflation targeting is meant to increase the flexibility of implementing monetary policy, ... Read more
24 Jul 2020
KResearch projects that the Fed will continue to maintain the interest rate at 0.0-0.25 percent at its upcoming monetary policy meeting on July 28-29, 2020. The measures that have already been taken should be sufficient to sustain the US economy, which is weakening and will likely take a long time to achieve recovery. ... Read more
9 Jun 2020
The US economy continues to experience increased risk despite recovering signs seen after Washington began easing lockdown measures in May 2020. The US Purchasing Managers’ Index (PMI) came in at 43.1 in May, rising over the 41.5 reported for April while unemployment slipped to 13.3 percent in May, from the 14.7 percent recorded in April. Consumer spending and domestic travel have exhibited signs of recovery, ... Read more
27 Apr 2020
The US economy is experiencing markedly elevated risk from the spread of COVID-19. The International Monetary Fund (IMF) projects that the US economy in 2020 may contract by 5.9 percent, a decline comparable in severity to that of the Great Depression in 1930. The US economy severely contracted after the rate of COVID-19 infections spiked sharply, prompting the US authorities to issue fiscal stimulus packages with the highest limits in history. Meanwhile, the Federal Reserve (Fed) has already made two emergency rate cuts, ... Read more
4 Mar 2020
The Federal Reserve (Fed) trimmed its policy rate by 0.50 percent to 1.00-1.25 percent at an emergency meeting, March 3, 2020. The move suggests that the Fed has a more “negative” view towards the impact of the COVID-19 on household and business spending, plus the US economy overall, prompting it to deliver a rare emergency rate cut two weeks ahead of a scheduled regular FOMC meeting. ... Read more
27 Jan 2020
We at KResearch view that improving signs seen in the US economy overall will continue to provide the Fed room to keep its policy rate steady at least until 1Q20. However, the US manufacturing sector has not substantially recovery despite the signing of the first phase of a broader trade pact between the US and China. ... Read more
9 Dec 2019
KResearch expects that the US Federal Open Market Committee (FOCM) will likely resolve to keep its policy rate unchanged pending an economic assessment while also unveiling its new economic growth and interest rate forecasts at the final meeting of 2019. We expect that the Fed may maintain its 2020 US economic growth forecast at approximately 1.8-2.1 percent, which would be at the same par as it did during the previous meeting and slightly lower than the figure projected for 2019. A significant change may not be seen in the Fed Funds rate for 2020. This means that the US policy rate may remain static over the next 1-3 months. The US economic data to be released in early 2020 will likely reflect whether the overall US economic performance is in unison with the forecast or not. This factor will likely dictate the Fed’s monetary policy stance, going forward.... Read more
25 Oct 2019
We at KResearch expect that the US Federal Open Market Committee (FOMC) may cut its policy rate by another 0.25 percent at its meeting scheduled for October 29-30, 2019. Although the Fed resolved to steadily trim its policy rates at the latest two meetings and announced the purchase of short-term treasury bonds in mid-November, the US economic performance overall and inflation expectations are continuing to fall and this may suggest that such actions may not be sufficient. Signs of a contraction seen in the consumption sector may inhibit the US economy to grow at less than that projected by the Fed. ... Read more
25 Jul 2019
KResearch expects the US Federal Reserve to cut the interest rates by 0.25 percent percentage point from 2.25-2.50 percent to 2.00-2.25 percent. Moreover, the Fed is likely to announce to end the balance sheet reduction before the initial schedule to ensure the continuity of the US economic expansion during the Federal Open Market Committee meeting on July 30-31, 2019. The Fed’s policy rate shift signals its flexibility in implementing monetary policy in response to economic environment rather than an attempt to address the slowing business activities. ... Read more
29 Apr 2019
KResearch expects the Federal Reserve to maintain the policy rate at 2.25-2.50 percent during the Federal Open Market Committee meeting on April 30-May 1, 2019. The Fed’s hint at easing monetary policy will sustain the US economic growth in the remainder of this year. During 2Q19 and 3Q19, the US economy will continue to encounter risk factors which may drag the economic momentum, prompting the Fed to keep the policy rate unchanged to support the continuous expansion of the US economy at least until the end of this year. Nonetheless, the Fed also suggested that it would closely monitor the US economic health and employ the data dependent approach. Although the market thinks it is possible for the Fed to consider cutting the policy rate by 0.25 percentage points before the end of 2019, the Fed is unlikely to signal the rate cut in the near future. This is because the interest rate reduction may be interpreted by the market as the US economy is entering the cycle of economic slowdown in the future.... Read more
5 Mar 2019
The Thai Baht weakened from late February to early March, 2019 after hitting a five-year record high of THB31.07 per Dollar. The Baht traded within a range of THB31.80-THB31.85 per Dollar (as of March 5, 2019) amid varied pressures, namely domestic factors and US Dollar short-covering from many market participants. The Baht’s movement was consistent with net sales in the Thai equity and bond markets by foreign investors. At the same time, the Dollar began gaining ground against other currencies, backed by economic data and rising treasury yields after positive signs of an imminent trade deal between Washington and Beijing. ... Read more
31 Oct 2018
We at KResearch expect that the FOMC will resolve to keep its policy rate intact at 2.00-2.25 percent at the upcoming meeting slated for September 7-8, 2018 before raising the Fed Funds rate by another 0.25 percent at the final meeting of this year. Factors supporting the path of Fed’s monetary policy normalization are the fact that the US economy has been performing well beyond its potential level and the robust US labor market as evidenced by favorable growth in household consumption and personal income despite a number of downsides, such as its trade dispute with China. Even though there has been volatility in financial markets after the long-term US Treasury yields rose, the Fed may continue to raise its policy rate this year. Meanwhile, the US real economic and financial sectors remain solid and they may not be significantly affected by volatility in financial markets while such a swing will likely allow investors to improve their risk assessments, thus helping ease risk of a property bubble. Chances for an inverted yield curve, being the bellwether for an economic recession, will be slimer given the rise in long-term US Treasury yields.... Read more
10 Oct 2018
It is apparent that the Thai currency and the Thai government bond yields - especially the long-term bond yields - have begun to ostensibly “swing” in the last quarter of the year. The Thai Baht weakened to touch THB33.10 against the greenback on October 9 (when the net sales of equities and bonds by foreign investors totaled THB4.63 billion and THB3.26 billion, respectively) or down by 2.6 percent from THB32.25/USD registered early October. Meanwhile, the Thai government 10-year bond yields steadily increased to 2.88 percent, the highest level in 21 months.... Read more
11 Jun 2018
KResearch expects the Federal Reserve (Fed) to raise its policy rate by 0.25 percentage points from 1.50-1.75 percent to 1.75-2.00 percent during the fourth round of the Federal Reserve Open Market Committee (FOMC) meeting this year on June 12-13, 2018. A solid expansion of the US economy and the fact that the US inflation rate is moving in-line with the Fed’s target support the implementation of a neutral monetary policy to stabilize the economy in the long term and to prevent an economic bubble. Nonetheless, factors deserving close attention include the Fed signals toward future interest rate movements particularly the long term rates because they will reflect the path of the Fed policy rates in the next 1-2 years. In addition, if the Fed decides to significantly increase the long-term interest rates, the decision may create volatility in global financial markets.... Read more
27 Apr 2018
KResearch expects the Federal Reserve (Fed) will resolve to maintain its policy interest rate at 1.50-1.75 percent in its third meeting of this year, in awaiting to assess further developments of the US economy and risks arising from trade disputes. Given the US attempts to minimize their trade deficits with many countries, their import duties may be raised again, especially for imports from China. If the two countries cannot reach a satisfactory conclusion on their trade relations, higher import duties imposed by the US will become in effect at the end of May 2018, which will most likely affect their economic developments and inflation directions. Therefore, the Fed will have to keep a close watch on that situation.... Read more
16 Mar 2018
We at KResearch expect that the US Federal Open Market Committee (FOMC) will increase its key policy rate by another 0.25 percent to 1.50-1.75 percent at the second meeting of 2018 slated for March 20-21, given that the US economy has grown beyond its potential. Looking ahead, there is a likelihood that unemployment will slip to a five-year low, which should allow the Fed to undertake further policy normalization gradually, aimed at easing risk stemming from an overheated economy. US inflation has remains relatively stable, meaning that the Fed may not necessarily have to undertake more rate hikes any time soon.... Read more
26 Jan 2018
KResearch expects the US Federal Reserve (Fed) to maintain their policy rate at 1.25-1.50 percent during their first round of meeting o... Read more
30 Oct 2017
KResearch holds the view that the FOMC will resolve during their meeting slated for October 31-November 1, 2017, to maintain their key policy rate... Read more
22 Sep 2017
September 19-20, at their 6th meeting of 2017, KResearch expects the US Federal Reserve may signal the start of their balance sheet reductions by ... Read more
24 Jul 2017
KResearch expects that the Federal Reserve may resolve to keep the Fed Funds Rate steady at their upcoming July 25-26 meeting, amid softening inflat... Read more
16 Jun 2017
As reflected in their latest “dot plot”, another Fed Funds Rate hike could be possible this year. But what is quite beyond the market expectation fo... Read more
12 Jun 2017
KResearch expects a “rate increase” resolution to be approved at the FOMC's fourth meeting of 2017, slated for June 13-14. Such increase might be p... Read more
28 Apr 2017
KResearch has evaluated that there should be room for the US central bank to raise its Fed Funds rate perhaps another one or two more times this ye... Read more
30 Jan 2017
KResearch expects that the US Fed will at its first 2017 meeting likely hold the policy rate steady at 0.50-0.75 percent amid uncertainty about Tru... Read more
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