OCBC Bank’s executive director of investment strategy Vasu Menon says that US Fed Chairman Jerome Powell showed “strong determination” that rates must increase further given the continued strength of the labour market and inflation data, and warned that the ultimate level of the Fed funds rate may be higher than previously expected.
For the fourth meeting in a row on Nov 2, the US Federal Reserve Open Market Committee (FOMC) raised its target rate by another 75 basis points (bps) to the 3.75% to 4.00% range.
While some analysts believe the pace of rate hikes may start to slow — as the Fed has guided – most believe the Fed fund rate will still exceed the current policy rate range, with markets now expecting the rate to cross 5% next year — the highest level since 2008.
