Opinion: Market Pricing of Fed and ECB Rate Hike Paths May Be Too Aggressive

Odaily: Indosuez Wealth Management believes that the market's current pricing of the Federal Reserve's and European Central Bank's interest rate paths remains notably more hawkish than the firm's baseline scenario. Strategists Lucas Meric and portfolio manager Alexandre Baer expect economic growth to remain stable while inflation gradually returns to normal, which would limit the room for central banks to tighten monetary policy further.

The two said: "However, it may still take some time to accumulate enough data on moderate underlying inflation and economic growth for this scenario to materialize. During this period, the bond market will remain volatile." Money markets currently expect the Fed to raise rates by about 1.5 times and the ECB to raise rates twice over the next 12 months. (Sina Finance)