Pictet: The Market May Be Overreacting to Fed Rate Hike Expectations

According to a report by Golden Finance on July 28, Pictet Wealth Management pointed out that the market's reflection of the probability of a Federal Reserve rate hike is unusually high. 'While we cannot completely rule out the risk of a surprise rate hike, the current market pricing appears too elevated,' Senior U.S. Economist Xiao Cui stated in a report. Cui believes that the latest U.S. inflation data and statements from Federal Reserve officials have reinforced expectations that the Fed will keep interest rates unchanged at 3.5%-3.75% this week. However, she noted that officials continue to view inflation as the primary policy risk, leaving the door open for tightening policy as early as September. Cui also suggested that regional Federal Reserve Bank presidents Logan and Harker might cast two dissenting votes in favor of a 25 basis point rate hike, with Kashkari potentially casting a third dissenting vote.