Rate hikes are positive for the local banks. However, Koh of UOB Kay Hian has lowered his price target for DBS Group Holding by 10%, to $35.80. On the other hand, fewer hikes than some earlier forecasts is less negative for S-REITs.
Economists at Julius Baer are trimming rate hike outlooks: “We recently trimmed down our expectation for the first hike on 16 March to 25 basis points (bps), as the probability of a 50 bps hike dwindled. From there, we continue to expect further 25 bps hikes to 1.25% at the following meetings in May and June, before pausing as inflation starts to recede.”
In an update on March 10, Jonathan Koh, an analyst at UOB Kay Hian who was expecting a total of 8 rate hikes is now anticipating just 4. “With conditions in the labour market having improved and higher inflation remaining a threat, the Fed is expected to kick-start the interest rate upcycle with a hike of 25bp during the upcoming FOMC meeting on 15-16 March. We expect a series of four hikes with the Fed Funds Rate reaching 1.0% by end-2022 (unchanged). We expect no hikes in 2023 (previous: four hikes),” he says.
