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- Fed: A 50 bps rate hike would be a huge USD-negative shock – Credit Suisse
Fed: A 50 bps rate hike would be a huge USD-negative shock – Credit Suisse
Looking at today’s Fed meeting, the market is pricing in around 79 bps of tightening, i.e. factoring in a modest chance of a 100 bps hike alongside near-certainty of a 75 bps one. Economists at Credit Suisse analyze how could the US dollar react to a 100 bps or 50 bps hike.
A 100 bps rate hike would be a immediate USD bullish outcome
“A 100 bps rate hike would be a more immediate USD bullish outcome if nothing else by forcing the market to consider whether other central banks can realistically keep up with upside-surprise Fed rate hikes of that magnitude.”
“A 50 bps rate hike would be a huge USD-negative shock now that key ex-US central banks are hiking by more than that level. We ascribe a very low probability to this outcome.”
See – Fed Preview: Forecasts from 16 major banks, fast pace hiking cycle continues
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