BNP Paribas: Fed’s likelihood of taking action in July has diminished

According to Odaily, Isabelle Mateos y Lago, Chief Economist at BNP Paribas, stated: "If 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 the Fed to raise interest rates remains valid." Before the July 4th holiday began, the short-term interest rate futures market priced in about a 20% probability of the Fed raising rates at its July 29th policy meeting, down from 33% before the non-farm payroll report. The market still expects the Fed to raise rates by 25 basis points this year, but not until as early as December.

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 skipping this additional hike." She warned that the normalization of energy supply could take half a year or longer to take effect, and inflation in the eurozone might accelerate again. Even so, she believes that apart from regions affected by energy, consumer prices elsewhere face no upward pressure. (Jin Shi)