Mitsubishi UFJ: Inflation data remains high. The Federal Reserve will still raise interest rates by 25 basis points

as report goes, “The inflation data recorded this week, although in line with expectations, are still high,” said an economist at Mitsubishi UFJ. “We expect the Federal Reserve’s tightening cycle to come to an end, with a maximum tightening of 50 basis points in the future. We may see the FOMC suspend interest rate hikes after a further 25 basis points hike,” the bank’s economists also said: “Although the inflation data of the United States this week cannot guarantee that the tightening speed will accelerate to 50 basis points, if the financial market situation in the United States does not deteriorate again due to another incident in regional banks in the United States or elsewhere, then the inflation level is still high enough to justify further interest rate hikes next week.”

Interpretation of this information:

The message highlights the view of economists at Mitsubishi UFJ on the inflation data in the United States. While the inflation data is in line with expectations, it still remains high. As a result, the economists expect that the Federal Reserve’s tightening cycle will come to an end soon, possibly with a maximum tightening of 50 basis points in the future. They also suggest that the FOMC may suspend interest rate hikes after a further 25 basis points hike.

The message further states that the inflation data cannot guarantee an acceleration in the tightening speed to 50 basis points. The real possibility of another regional bank failure or a similar incident may cause a deterioration in the US financial market, which could disrupt the current expectations. However, if such an incident does not happen, and the inflation level remains high, then it can justify a further interest rate hike next week.

In summary, the three keywords that represent the message are:

1. Inflation: The central theme of the message revolves around inflation, and how it may impact the decision-making process of the Federal Reserve. The inflation level remains high, and although in line with expectations, it may still cause concerns for policymakers.

2. Tightening cycle: The economists at Mitsubishi UFJ predict that the tightening cycle of the Federal Reserve will come to an end soon, probably after a maximum tightening of 50 basis points. They also suggest the possibility of interest rate hikes suspension after another 25 basis points hike.

3. Financial market: The message indicates that the financial market situation in the United States may affect the future course of interest rate hikes. Another regional bank failure or a similar incident could cause a deterioration in the market, disrupting current expectations of interest rate hikes.