The chief market strategist at Orbex, Asim Mansour, said: US Federal It has been accelerating the pace of interest rate hikes since 1994, and if the Fed were to raise interest rates by half a percentage point or ¾ percentage point during the next meeting, it is expected to continue raising interest rates by half a percentage point during the upcoming meetings to raise interest rates above 2%.
Assem Mansour added in an interview with Al-Arabiya today, Sunday, that the current inflation rate is 4 times the US Federal Reserve’s target of 2%, as the inflation rate exceeded 8%, the highest since 1984.
The chief market strategist at Orbex said that the rapid pace of interest rate hikes would have negative effects on US stock markets.
Assem Mansour stated that the Fed’s acceleration of the rate of interest rate hike, makes it sacrifice one of the two things, namely, growth rates that slow with this pace, or leaving inflation rates to record high levels, but the current inflation will not only have negative effects on the economy, but it plays a role in the administration’s political agenda. The United States, which will not agree to the erosion of the purchasing power of the American citizen with the rise in fuel prices, and President Joe Biden’s criticism of fuel companies and their exploitation of high oil prices globally to raise the price of fuel, and there is a big difference between international oil prices and fuel prices.
He added that there is pressure on the Federal Reserve to move quickly to contain inflation, and he does not expect the Federal Reserve to succeed in controlling inflation anytime soon. the second half of this year.”
Regarding the impact on US stock markets, the chief market strategist at Orbex said that there was a saying by the former US Federal Reserve, when he answered a question regarding the Fed’s rescue of Wall Street, and he said that when the public is saved, Wall Street must be saved, and therefore the Fed will be cautious in adjusting Monetary policy, but he will not abandon accelerating the pace of interest rate hike, and raising by half a percentage point will lead to a severe withdrawal of liquidity that may lead to violent declines from the markets, but we will not witness major collapses, and we may witness strong declines in the second half of this year.
Assem Mansour said that the Fed will focus more on inflation at the expense of economic growth, and monetary tightening is inevitable, and this was due to the delay in adjusting monetary policy, and Janet Yellen recently admitted that she was wrong in estimating the current inflation hikes.