Fed is expected to maintain interest rates this week, but 76% see a rise in December
A CNBC survey of 30 managers, strategists and economists points to pause now, tightening later and inflation seen as a broad problem.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM CNBC · 2 MIN
Anyone betting on an immediate tightening by the Federal Reserve will have to wait. According to CNBC, 93% of the 30 fund managers, strategists and economists interviewed in its latest survey expect the US central bank to take a break at this week's meeting. The consensus, therefore, recognizes the problem of inflation, but tends to leave the answer for later.
The next stage already appears on the horizon. Among those interviewed, 76% project an interest rate hike at the December meeting, and more than half believe that the Fed will raise rates the following year, on average around two hikes. At the same time, 30% advocate that the bank raise interest rates at this meeting, a smaller but not negligible portion. The survey is conducted by CNBC before each Fed meeting and measures expectations, not decisions.
The diagnosis of inflation is broad. For 70% of those interviewed, the problem goes beyond the rise in energy prices. Regarding the remedy, opinions are divided: 40% say that the Fed needs to slow down the economy below its potential to beat inflation, 23% think that the slowdown should only be partial and 27% say that there is no need to slow down activity.
Richard Bernstein, global head of macro investments at Janus Henderson Investors, cited by CNBC, criticizes the bank's caution. For him, the hesitation to raise interest rates is difficult to understand after a long period of monetary and fiscal generosity, with nominal GDP growing between 6% and 8% and with leading indicators of rising inflation. The argument summarizes the discomfort of part of the market: the economy remains strong while the tightening has not yet begun.
In oil, the price scenario also comes into play. The survey projects benchmark U.S. crude oil to be at $88 six months from now, up from $82 in the September round but below the $101 current level. For analysts, energy is a component of inflation, not its only driver.
What changes for the investor
If the predicted sequence is confirmed, the most direct channel is the cost of money. Higher interest rates make credit more expensive, increase the rate used to discount future profits and tend to weigh more on the shares of companies that depend on growth and financing. On the other hand, fixed income tends to gain relative attractiveness. The research shows expectations, not certain dates or interest levels, so it is worth following inflation data, the Fed's speeches and the evolution of oil before drawing conclusions about the portfolio.
Automatically translated from Portuguese.
