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The US Federal Reserve is now more likely to deliver a third big rate increase this month, according to investment banks, which have recently raised their hike forecasts to 75 basis points (bp).
ABN Amro, the latest to revise its expectations said it is changing its call for the September Federal Open Market Committee (FOMC) meeting to a 75bp hike, up from its previous forecast of 50bp.
The investment bank said that a 50bp hike is likely in November, followed by a 25bp move in December. It still expects the fed funds rate to peak at 4%, but the hike is expected to come sooner - in December as opposed to February.
"A 75bp hike now looks likely in September given signaling from Fed officials in recent days," Bill Diviney, ABN Amro's US senior economist, said in a note.
"A flurry of Fed officials in recent days have made hawkish comments suggesting little appetite to slow down the pace of rate hikes just yet."
Goldman Sachs had said on Wednesday that it now expects the Fed to raise the rates by 75bp this month and 50bp in November.
"[Federal Reserve] officials have sounded hawkish recently and have seemed to imply that progress toward taming inflation has not been as uniform or as rapid as they would like," Jan Hatzius, Goldman chief economist, said in a note.
Fed Reserve Chairman Jerome Powell said on Thursday that the central bank is "strongly committed" to bring down inflation.
Benchmark interest rates have so far been increased four times the year. If the banks are right, this month's interest rate move will be the third straight 75bp hike in 2022.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
