ING Bank: Fed to hike rates by 25bp in summer

ING Bank analysis team point out that the markets are believing that the US Fed’s neutral stance will eventually give way to policy easing.

Key Quotes

“Fed funds futures contracts are pricing in a 25bp rate cut by the summer of 2021, but we continue to believe that the next move is more likely to be an interest rate increase.”

“After all, the economy is running pretty strongly with little spare capacity, and this is generating rising wage pressures in the labour market, which should keep consumer confidence and spending supported.”

“We believe the Federal Reserve will overcome its current reticence and hike rates 25bp during the summer.”