BNY Mellon strategist expects another Federal Reserve rate hike in December; 2027 path remains uncertain
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AT A GLANCE
BNY Mellon expects the Federal Reserve to raise rates once more in December, but the 2027 outlook remains uncertain due to the situation in the Middle East and inflation uncertainty.
Article
BNY Mellon: The Federal Reserve is expected to raise rates once more in December, but the outlook through 2027 remains uncertain
BlockBeats reported on September 22 that John Velis, BNY Mellon's Americas macro strategist, said in a report that the Federal Reserve is expected to raise rates once more in December, but it is far from certain that the Federal Reserve can implement as many rate hikes in 2027 as the market has priced in. “The answer depends on how effective tightening policy can be amid the current inflation shock.”
He said this depends to a great extent on the situation in the Middle East, where visibility remains limited. “A de-escalation of tensions, along with the resulting decline in oil prices, could change the considerations of the market and the Federal Reserve.” However, he added that tying the policy outlook to a situation that could deteriorate first and improve later is not a long-term strategy.
Original link https://m.theblockbeats.info/flash/368394
Key points
01
BNY Mellon Americas macro strategist John Velis published a report.
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The report expects the Federal Reserve to raise rates once more in December.
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The report expressed uncertainty over whether the Federal Reserve can implement the same scale of rate hikes in 2027 as the market has priced in.
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The effectiveness of policy depends on how effective tightening policy is amid the current inflation shock.
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The outlook depends to a great extent on the situation in the Middle East, where visibility remains limited.
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A de-escalation of tensions and a decline in oil prices could change the considerations of the market and the Federal Reserve.
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Tying the policy outlook to a situation that could deteriorate first and improve later is not a long-term strategy.
AI-assisted interpretation
The following is analysis, separate from reported facts. Verify important claims independently.
An analyst at BNY Mellon believes the Federal Reserve may raise rates again in December. However, they are doubtful that the Federal Reserve will continue with the large rate hikes the market expects in 2027. This is mainly because the situation in the Middle East is unstable; if tensions ease and oil prices fall, the Federal Reserve's decisions could change. The analyst warned that basing future policy on unpredictable geopolitical events is unwise.
Why it matters to readers
Federal Reserve rate decisions directly affect global asset prices and borrowing costs. If the rate-hike path differs from market expectations, financial-market volatility may follow. The situation in the Middle East, as an external variable, adds uncertainty to forecasts.
Understanding expectations for Federal Reserve rate hikes can help beginners assess market risk. When experts express uncertainty about long-term policy, investors should remain cautious and monitor the potential effects of geopolitical news on oil prices and inflation.
Risks and unknowns
The specific trajectory of the situation in the Middle East is unknown
The actual severity of the inflation shock is unknown
The Federal Reserve's final decision may differ from the bank's forecast
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Federal Reserve
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