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Barclays, Which Called This Fed Hike Right, Now Sees 50 Basis Points in July

·1 min read
Barclays, Which Called This Fed Hike Right, Now Sees 50 Basis Points in July

(Bloomberg) -- Barclays Plc, which was among the first major banks to shift its Federal Reserve prediction for June to a 75-basis-point hike, has said that it anticipates the central bank will return to hiking at a 50-basis-point pace in July.

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The UK-based bank correctly forecast Wednesday’s three-quarter-point hike after changing its view in the wake of the latest US consumer-price inflation report.

“We now expect the Fed to shift back to a 50bp hike at the July 27 meeting, bucking current market expectations,” Barclays economists wrote in a note released after the Wednesday decision. The bank pointed to “signs that consumption and the US housing market are slowing.”

Chair Jerome Powell, speaking at his post-decision press conference, said that he doesn’t expect 75-basis-point moves to be common but kept open the prospect of 50- and 75-basis-point moves in the future.

The market at one point moved to fully price in a move of 75 for July, but has since moved to price in somewhere between 50 and 75 following Powell’s remarks.

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