BNP Paribas: Chances of Fed Action in July Diminish

Odaily Planet Daily News Isabelle Mateos y Lago, Chief Economist at BNP Paribas, stated: "If the non-farm payrolls data for July is very strong, approaching or exceeding 130,000, then I believe the July meeting will be full of suspense. Now the uncertainty may be lower, but in my view, the case for the Fed to raise interest rates remains intact." Before the start of the July 4th holiday, short-term interest rate futures markets priced in about a 20% chance of a rate hike at the Fed's July 29th policy meeting, down from 33% before the non-farm payrolls report was released. Markets still expect a 25-basis-point rate hike from the Fed this year, but not until at least 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 rate hike." She warned that the normalization of energy supply could take half a year or longer to take effect, and inflation in the Eurozone could accelerate again. Even so, she believes that apart from regions affected by energy, consumer prices elsewhere will not face pressure. (Jin Shi)