(This story has been corrected to change the dateline to June 12)
(Reuters) – Most big Wall Street banks expect the Federal Reserve to keep interest rates unchanged on Wednesday, while sticking to its hawkish tone due to a strong job market and elevated inflation.
Several economists say that it is a toss-up between a skip and a hike in the June meeting. Most banks expect the central bank to prepare markets for a hike in July.
Money markets are currently pricing in a more than 70% chance of a pause this month, with rate cut expectations pushed out to next year.
Following are forecasts from some big U.S. banks and their global counterparts:
Brokerage June Expectation July Expectation Terminal rate
Name expectations
Citigroup 25 bps hike 25 bps hike 5.5% – 5.75%
HSBC 25 bps hike 5.25% – 5.50%
UBS Pause 25 bps hike 5.25% – 5.50%
Deutsche Pause See Fed raising rates one 5.30%
Bank more time in July
Goldman Pause 25 bps hike 5.25% – 5.50%
Sachs
Barclays Pause Expects 50 bps of hikes
through September; expects Fed
to signal a hike in July
J.P.Morgan Pause No hike 5% – 5.25%
Morgan Pause No hike 5% – 5.25%
Stanley
BofA Pause Sees a July hike as “highly 5% – 5.25%
probable”
Wells Fargo Pause No hike 5% – 5.25%
Nomura Pause
(Compiled by Broker Research team in Bengaluru)