Analyst expects Fed to further hike interest rates by 0.5 points in December

Analyst expects Fed to further hike interest rates by 0.5 points in December

2022-11-03

The U.S. Federal Reserve on Wednesday raised key interest rates by 0.75 percentage points, for a combined hike of 3.75 points over the course of the year. The Dow on Wednesday shed 500 points, leading the Taiex to also close down on Thursday. Taiwan shares lost 113 points, once again falling below the 13,000-point line. Analysts say the Fed will likely continue raising rates, with a 0.5-point hike expected in December. Let’s hear from an analyst.

Winson Wang
Analyst
The market generally expected that after the Fed raised interest rates by 0.75 percentage points, its attitude would turn dovish. But it’s staying hawkish. If the market maintains high interest rates, that could hurt the economy. Now people are more worried about the expanding gap in interest rates between Taiwan and the U.S., and whether capital outflows will continue. I think there isn’t a high chance that the Fed will raise interest rates by 0.75 points in December. I think it’s more likely to raise rates by 0.5 points. As long as the Fed maintains a high interest rate policy, and does not adjust interest rates downward, this negative impact on the stock market will persist.

The Fed’s hawkishness reinvigorated the U.S. dollar’s upward momentum. The New Taiwan dollar on Thursday shed NT$0.075 against the greenback, closing at NT$32.245 against the U.S. unit. With markets around the world still reacting to the Fed’s policies, and further rate hikes on the horizon, experts say Taiwan’s markets may continue performing weakly for at least a while.