Powered by MOMENTUM MEDIA
subscribe to our newsletter

US Fed ‘edging’ towards a rate rise: AMP

AMP Capital’s chief economist says the US Federal Reserve is setting the scene for a second interest rate hike in the coming months, with US money markets pricing in a 28 per cent chance of a move in June.

After five months of “a lot of noise but inaction”, Shane Oliver believes the US Federal Reserve (‘the Fed’) is moving towards another rate hike, with the June meeting a distinct possibility.

Mr Oliver said US money markets have seen the chances of a June hike increase from close to zero to 28 per cent on Friday.

But while a June increase in the official US interest rate is now a “close call”, a July or September hike is more likely for a few reasons, according to Mr Oliver.

“[First,] the Brexit vote will take place just one week after the June meeting and several Fed officials have indicated that the Fed will consider that,” he said.

Advertisement
Advertisement

PROMOTED CONTENT


“Fed voting members appear to be more cautious than the full range of Fed meeting participants who include non-voting regional presidents who tend to be more hawkish.

“[Finally,] the Fed will likely need more time to assess recent data releases which have only just started to improve again. So at this stage our base case is for a July move.”

More broadly, AMP Capital expects that constrained global growth will result in “very gradual” US Fed hikes.

“The risk that the US dollar will start to surge higher again creating renewed weakness in commodity prices, Renminbi deprecation, pressure on emerging countries and a brake on US growth all acting to constrain by how much and how quickly the Fed can hike,” Mr Oliver said.

[Related: Industry figures applaud RBA cash rate call]

US Fed ‘edging’ towards a rate rise: AMP
mortgagebusiness

Latest News

Preliminary ABS data has revealed that the value of residential construction work done has declined in the September quarter to its lowest l...

Westpac and its subsidiaries have reduced its owner-occupied and investment property fixed home loan rates, effective 24 November. ...

Defence Bank has appointed two new board directors and announced the retirement of long-term director Lieutenant Colonel Craig Madden. ...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Responsible Lending - what could lie ahead for lenders, brokers and borrowers?

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.