BNP Paribas: Likelihood of Fed Action in July Diminishes

Odaily Odaily reports: Isabelle Mateos y Lago, Chief Economist at BNP Paribas, stated, "If the non-farm payroll figure for July is very strong, approaching or exceeding 130,000, then I believe the July meeting will be filled with suspense. The uncertainty may be lower now, but in my view, the case for a Fed rate hike remains intact." Before the July 4th holiday began, the short-term interest rate futures market priced in roughly a 20% probability of the Fed raising rates at its July 29th rate decision, down from 33% before the non-farm payroll report was released. Markets still expect the Fed to deliver a 25-basis-point rate cut this year, but not until at least December.

Regarding the European Central Bank, Lagarde said, "The baseline expectation remains that there will be 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 forgoing this additional rate hike." She cautioned that the normalization of energy supply could take six months or more to take effect, and inflation in the eurozone may accelerate again. Even so, she believes that consumer prices in regions outside those affected by energy will not face pressure. (Jin Shi)