Head of the Middle East trading department at Saxo Bank, Yasser Al-Rawashdeh, said that the markets expect the central banks to tighten their monetary policy, pointing to the tightening of the monetary policy by the banks of Australia and England.
Al-Rawashdeh added in an interview with Al-Arabiya, today, Thursday, that risks still exist in the markets, in light of previous expectations of raising interest rates by 50 to 75 basis points to control inflation, and these risks are greater than excluding the Federal Reserve raising interest rates by 75 basis points. .
In response to a question at a press conference following the latest meeting of the Federal Reserve, which decided to raise interest rates by half a percentage point and indicated other increases expected, he said Federal Reserve Governor Jerome Powell “A 75 basis point increase is not something the committee is actively considering.”
Yasser Al-Rawashdeh said that risks persist in the markets as the war in Ukraine is still going on, energy prices are high, and China is closed with high risks regarding inflation. Therefore, talk of raising 75 basis points will return in the coming weeks, and it is still a possibility.
In response to a question about Jerome Powell’s regret for ruling out a 75 basis point hike, the head of Middle East trading at Saxo Bank said that it would have been better not to talk about it because the markets continue to anticipate this scenario, and witnessed increases due to this statement, especially since future risks It remains in place with the possibility of the closure in China continuing for a long time.
He explained that the dollar’s decline is short-term weakness, and with challenges to the European and British economy and the increase in US bond yields, this will give additional support to the dollar in the coming period.
The interest rate futures markets give a high probability that the Fed will raise rates by three-quarters of a percentage point at its next meeting in June.
Jerome Powell pointed out that inflation is very high and we know that it is causing difficulties.
“Additional increases of 50 basis points should be on the table at the next two Federal Reserve meetings,” he added.
He stressed that the main focus is to reduce inflation to return to 2%.
On Wednesday, the Federal Reserve decided to raise its key interest rate by half a percentage point as the most aggressive step yet in its battle against rising inflation.