© Reuters. Citi sees 2 more rate hikes in June and July
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Citi continues to expect two more 25bps rate hikes, analysts said Thursday after the U.S. Federal Reserve voted to raise rates to a 16-year high on Wednesday.
The Fed increased its key interest rate by 0.25 percentage points to between 5% and 5.25%.
Analysts said in a note to clients that Federal Reserve Chair Powell “did his best to remove guidance regarding future policy rate increases.”
“Statement language no longer ‘anticipates’ that rate hikes may be appropriate,” analysts wrote. “Instead, policymakers will assess the need to raise rates on a meeting-by-meeting basis based on incoming data. The new language is close to our and market expectations.”
Analysts added that Powell did not seem overly concerned about emergent risks to financial stability.
“He softly pushed back on pricing of near-term rate cuts, suggesting the outlook for inflation would not support lowering policy rates. We continue to expect two more 25bp policy rate increases in June and July to a terminal policy range of 5.5-5.75%,” analysts concluded.