Interest Rate Hike Again in December?...JPMorgan "No Tightening Next Year"

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Global investment bank JPMorgan has forecast an additional interest rate hike by the Federal Reserve (Fed) in December, signaling the end point of monetary policy tightening. While inflationary pressures due to supply shocks persist, it is observed that this will not expand into a long-term tightening cycle extending into next year.

Beincrypto reported, citing a JPMorgan research report, that the Fed is highly likely to further raise the benchmark interest rate by 0.25 percentage points at the upcoming Federal Open Market Committee (FOMC) meeting in December, following its September hike. The Fed previously implemented its first interest rate hike in three years on September 16, unanimously raising rates from 3.75% to a range of 4%. JPMorgan analyzed that persistent inflationary pressures, such as the core Personal Consumption Expenditures (PCE) price index exceeding 3% every month this year, and geopolitical risks are providing justification for an additional hike in December.

However, contrary to market fears of excessive tightening, the possibility of this rate hike being prolonged was assessed as low. Michael Feroli, JPMorgan's Chief U.S. Economist, stated, "Inflation is still driven by supply shocks," and "We do not anticipate a long-term interest rate hike cycle extending into next year." He explained that considering the time lag for monetary policy effects to ripple through the real economy, the October meeting would see rates frozen, followed by a final adjustment in December, and then a halt to policy in 2027.

The virtual asset market is keenly watching the Fed's interest rate path. While interest rate hikes typically lead to liquidity reduction and burden risk assets, the expectation that the tightening cycle will end with the December hike is interpreted as a factor of relief in terms of resolving uncertainty. Bitcoin (BTC) and major virtual assets are showing a trend of bottoming out amidst expectations of the Fed's interest rate cap.

Experts are noting that the Fed's tightening intensity is reaching its peak. The analysis suggests that when supply-driven price instability is controlled, the balance of monetary policy could shift back towards economic stimulus.

The forecast that the tightening will conclude after one more hike in December is gaining traction. As the Fed's terminal interest rate level becomes clearer, market attention is focused on whether virtual assets and financial markets can overcome macroeconomic uncertainty and secure momentum for a rebound.

[Article Summary]

-JPMorgan forecasts that the Fed will proceed with an additional 0.25 percentage point hike in December due to supply shocks and inflationary pressures in the 3% range.

-Chief Economist Michael Feroli stated that this hike would be the last and that the tightening cycle would not be prolonged until 2027.

-As expectations for reaching the terminal rate in December and ending tightening spread, anticipation for reduced uncertainty in the virtual asset market is growing.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*