BNP Paribas: Possible for Fed to Take Action in July Reduced

Odaily News Isabelle Mateos y Lago, Chief Economist at BNP Paribas, said: "If the non-farm payrolls in July are very strong, approaching or exceeding 130,000, then I believe the July meeting will be full of suspense. The uncertainty may now be lower, but in my view, the case for a Fed rate hike still holds." Before the start of the July 4th holiday, the short-term interest rate futures market priced in about a 20% probability of a Fed rate hike at the July 29th rate decision, down from 33% before the non-farm report was released. The market still expects the Fed to hike rates by 25 basis points this year, but not until December at the earliest.

Regarding the European Central Bank, Lago said: "The baseline expectation remains for another rate hike in September. However, it is worth noting that members of the Governing Council who spoke at the Sintra conference did not rule out the possibility of foregoing this additional rate hike." She warned that the normalization of energy supply could take half a year or longer to take effect, and eurozone inflation could accelerate again. Even so, she believes that apart from energy-affected regions, consumer prices in other areas will not face pressure. (Jin Shi)