BNP Paribas: Fed is most likely to raise interest rates in May due to strong economic data

According to the minutes of the Federal Reserve’s (FED) last monetary policy meeting released on Wednesday (February 22), many Fed policymakers said that if employment and inflation data are in line with expectations, it may be appropriate to raise interest rates again “soon” of. But the lack of details in the Trump administration’s new economic plan has created a degree of uncertainty for the Fed.

BNP Paribas economist Laura Rosner said in an interview on Wednesday (February 22) that while the Fed may still wait for details on fiscal policy, it will also depend on economic data. is stable, and economic data has been strong.

The bank currently predicts that the Federal Reserve will raise interest rates three times in 2017, with the next rate increase in the second quarter, most likely in May.

BNP Paribas said that if the next employment report shows a decline in unemployment, higher wages, and strong job growth, it will put more pressure on the Federal Reserve.

At the same time, the bank believes that if the Federal Reserve decides to raise interest rates in May, it will support the statement that “every meeting is possible” and the Federal Reserve may later hold a special press conference to explain its actions.

Rosner said, “The current market has not fully factored in the possibility of raising interest rates in March, and the Fed does not seem to be eager to act. Given the strong economic data, action in June seems too late.”

The U.S. federal funds rate shows that after the meeting minutes are released, the probability of the Fed raising interest rates in March is 34%, compared with 38% before. The probability of raising interest rates in June fell to 74.6% from the previous 78.4%, and the probability of raising interest rates in September dropped to 87.4% from the previous 88.9%.