Fed Funds target rate set at 4.25-4.50% by year-end, EUR/USD to fall to 0.95 in 12M – Danske Bank
|Federal Reserve hiked rates by 75 bps. Economists at Danske Bank revise their Fed call and now expect two more 75 bps hikes in the November and December meetings. They also still forecast EUR/USD to fall to 0.95 in 12 months.
Fast hikes to continue
“We think Fed will prefer more aggressive path and hike 75 bps in both November and December meetings. We also continue to see risks tilted towards Fed maintaining financial conditions at restrictive levels for longer. Consequently, as Powell also acknowledged, the chances of a ‘soft landing’ have declined.”
“Our forecast would bring the Fed Funds target rate to 4.25-4.50% by the end of the year. In terms of broader market views, we stick to our forecast for EUR/USD to fall to 0.95 in 12M.”
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