Economist: Market Still Underestimates Potential Fed Tightening Policies
05/29 04:00
On May 29, Blerina Uruci, Chief U.S. Economist at T. Rowe Price, stated that the market may still underestimate the likelihood of the Federal Reserve further tightening its policies. In her report, Uruci noted that since early May, the duration of the Iran conflict has exceeded expectations, oil prices have risen, and U.S. economic growth remains resilient. While the Fed can overlook temporary energy shocks, sustained pressure from oil and import prices could affect inflation expectations, wage dynamics, and corporate pricing behavior. Uruci shifted her main view to indicate that the federal funds rate will remain unchanged over the next 12 months. She estimates a 45% probability that rates will stay the same, a 35% chance of a rate hike by the end of the year or early 2027, and a 20% probability of a rate cut.
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