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27 Jul 2023

Econ Digest

The Fed raised its policy rates by 0.25% as expected, while KResearch views that there is a likelihood that the Fed will press ahead with its rate increases at the next meeting


        The US Federal Reserve (Fed) raised its policy rate by 0.25% as expected at the Federal Open Market Committee (FOMC) meeting on July 25-26, 2023, bringing the policy rate up to 5.00-5.25%, and the Fed also signaled that its decision going forward would depend on incoming data. The Fed remained open to raising rates again or holding rates at its next meeting in September.

        Most markets, however, view that the Fed may pause its interest rate hikes at the upcoming FOMC meeting because the US inflation rate is set to decline steadily ahead. KResearch views that there is a likelihood that the Fed will raise one more rate hike as signaled by the Fed’s dot plot released during its meeting in June 2023 if core inflation and wages do not fall as fast as previously estimated, and the labor market does not cool down as much as it should. The Fed continued to voice concerns at its July meeting that although inflation had begun to slow down, it remained well above the Fed’s 2.0% target and the labor market remained robust.

        As for the impact on the Baht, it may continue to fluctuate due to uncertainties surrounding the US monetary policy direction and domestic political issues, despite being supported by a recovery in the tourism sector going forward.

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Econ Digest