Fed officials are in favor of raising interest rates three times this year; the market may have underestimated the risk of rising oil prices
A Federal Reserve official believes that the current employment situation in the United States, the Federal Reserve is expected to raise interest rates, the oil market may be due to insufficient oil prices, but the market may not how to care about this risk.
United States Time 6 Tuesday, the Dallas Fed President, Robert Kaplan, interviewed CNBC declaring he favored raising interest rates three times this year; the action should not be too late. He believes that the United States is at or near full employment, and the jobless rate will fall to 3% this year. In such a situation, interest rates should be kept.
Kaplan predicts that the oil market will maintain a “delicate balance” in the next few years but may experience rising oil prices due to under-supply. Because the supply of shale oil in the United States will fluctuate with fluctuations in oil prices, large-scale oil and gas projects by energy companies will see a decrease in massive investment in shale oil production while pushing up total U.S. oil production. This creates a risk of short supply. He believes the market may not have considered this risk too much.
Last week Trump announced that it would impose tariffs on imported steel and aluminum products, which Kaplan said could give “some horrific impact” to the United States ‘ trade relations with Mexico and Canada. However, given the strong ties with these countries, The trade relations are in the interest of the United States, and he is optimistic about the real landing policy.
Kaplan did not have FOMC voting rights this year, and his voting rights turn to him in 2020. Earlier on Wall Street, the Federal Reserve announced in December last year that it was expecting a bitmap of interest rates when most of the Fed officials expected a total rate hike of three times this year. But recently the market is increasingly expecting the Federal Reserve to raise interest rates four times this year.
Last Tuesday the new Fed chairman Bao Weier in the House of Representatives testified, “is expected to raise interest rates further gradually,” the US economic outlook remains strong, market volatility will not stop the pace of rate hikes. The market is expected to raise interest rates four times; the 10-year U.S. Treasury yield returns 2.90%.
Last Thursday, the Fed “number three” and New York Fed President Dudley mentioned the possibility of four rate hikes this year. “If we are to raise interest rates four times and add 25 basis points at a time, I believe it will still be gradual,” he said, pointing out that it would be half the level of the radical tightening of the Fed’s ten-year policy ten years ago.
Powell’s attitude on the testimony of the Senator last Thursday was not as pronounced as Hawk last Tuesday. Wall Street anecdote mentioned later; the market has adequately predicted the possibility of raising interest rates three times, CME’s measurement tool shows that the federal funds rate futures market is expected to increase the probability of four times the rate of 30%.