London, United Kingdom--(Newsfile Corp. - March 9, 2023) - Kansai Tokushima Management anticipates that the US federal funds rate may rise up to a peak of 6%, following Federal Reserve Chairman Jerome Powell's recent warning that interest rates are likely to increase higher than previously expected.
Kansai Tokushima Management's Anthony Wright, Director of Institutional Markets has stated, "We believe that there is a plausible likelihood that the Federal Reserve will need to increase the Fed Funds rate to 6% and maintain it for an extended duration to moderate economic growth and lower inflation towards the vicinity of 2%."
Analysts from Kansai Tokushima Management cited the most recent jobs report and consumer price index reading as evidence that the economy is more resilient than expected. Anthony Wright added, "The present economy is less susceptible to interest rate changes compared to that of preceding decades, and while its resiliency is an asset, it poses a challenge for the Federal Reserve."
Kansai Tokushima Management call for a terminal rate of 6% coincides with other leading economists' prediction that may resume larger hikes of 50 basis points. The central bank raised rates by 25 basis points in February, bringing the federal funds rate to a range of 4.50% to 4.75%.
The CME Group's FedWatch tracker of fed funds futures bets shows that the probability of a half-point hike moved to 73.5% in Asia's Wednesday afternoon. A 50 basis point hike would bring the rate to a range of 5% to 5.25%.
The US reported an increase of 517,000 nonfarm payrolls in January, exceeding market estimates, and the unemployment rate fell to 3.4%, the lowest level since May 1969. The next report, expected on Friday, is likely to demonstrate the resilience of the labor market despite the Fed's aggressive rate hikes to tame inflation. Economists surveyed by Dow Jones estimate that 225,000 jobs were added last month.
About Kansai Tokushima Management
Kansai Tokushima Management is a financial services provider with offices in Tokyo, London, and Toronto. The company offers a wide range of customized financial solutions, including financial management, trading advisory, alternative investing, and financial planning services for both individual and corporate clients. Kansai Tokushima Management has a team of experienced professionals, the latest technology, and a customer-centric approach.
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Greater London, W1J 6BD, United Kingdom.
SOURCE: KANSAI TOKUSHIMA MANAGEMENT
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