Today, the Federal Reserve could deliver its final rate hike of a historically aggressive cycle. It is expected that the central bank could raise the its benchmark rate to 5.0%-5.25%. All eyes are on Jerome Powell, the central bank chief today, to see if he will hint of how things may progress from here.
Traders have assigned a 82% probability to a 25 basis-point increase while they see an 18% chance of no change at all. Apart from the potential rate hikes, the April jobs report due on Friday could also show cooling in the labor market, however a hotter than expected report could keep the Fed committed to keeping policy tight.
Another key factor to note is that the central bank’s moves over the last year may have caused enough damage and if deposits plunge and financial conditions get tighter, an economic problem could be on hand. Mike Wilson of Morgan Stanley said that a too-hawkish move by the central bank could end up dashing optimism for investors.
Meanwhile, Fundstrat’s Tom Lee believes that this may be the final rate hike of the cycle and this may be a ‘thesis changing’ event.
The company mentioned in the article is PepsiCo and the person is Barry Knapp. PepsiCo is an American multinational food, snack, and beverage corporation operating in more than 200 countries. It was founded in 1965 and is one of the largest food and beverage businesses in the world. Barry Knapp is a 40-year market veteran, and he has spoken about the Fed’s rate hiking cycle and the potential risks involved with it.
