Stan Chart expect two more rate hikes from Fed, one from RBI

A bunch of recent US economic data has led to markets expecting more rate hikes from the Federal Reserve. Last week, the US consumer price inflation and producer price inflation came in higher than expected, as did the retail sales data for January. The CME FedWatch tool now shows a majority expecting at least two more rate hikes from the Fed, in March and May, while a respectable 18 percent expects three more rate hikes, taking the Fed funds rate to 5.75 to 6 percent.

In an interview with CNBC-TV18, Eric Robertsen, Global Head of Research and Chief Strategist at Standard Chartered Bank said that there will be two more rate hikes from the US Fed in the next few meetings and that the Reserve Bank of India (RBI) is also grappling with similar concerns and the RBI will have one more rate hike as India faces the risk of higher oil prices.

He said, “We have two more hikes penciled in for the next two meetings. I think what the Fed has been saying all along is that they would expect to keep the policy rate higher for longer. And the economic data recently is playing into their hands a little bit.”