The Federal Reserve's September FOMC meeting decided to raise the federal funds rate target range by 25 basis points to 3.75% — 4.0%. In response, Liu Yu, chief economist at Societe Generale Securities, said that after the start of the current interest rate hike cycle, interest rates will probably be raised by at least 25 basis points for the purpose of curbing economic overheating and inflation. The Federal Reserve's bitmap points to another 25 basis point rate hike before the end of this year, which is not much different from market expectations. Whether to continue to raise interest rates in 2027 depends on subsequent US growth and inflation data. For example, AI capital expenditure continues to grow at a high rate, regardless of whether productivity increases or not, there is a high possibility of interest rate hikes in 2027. The end of the interest rate hike cycle may be between 4% and 5%. Due to debt pressure, the probability of interest rate hikes of 5% or more in this round is low, unless it is confirmed that productivity has increased significantly. On the asset side, the Fed raised interest rates to enhance the credibility of the Federal Reserve, help stabilize the long term and flatten the curve in the short term. Looking at the long-term interest rate on US bonds, the rise in long-term interest rates on US bonds is driven by the triple rise in oil prices, fiscal deficit, and AI capital expenditure. However, the two major structural factors of deficit and AI capital expenditure are unlikely to reverse in the short term. There is still a risk that long-term interest rates will continue to rise, and interest rates on 10-year US bonds may rise to the 5.2% to 5.5% range.

The Federal Reserve's September FOMC meeting decided to raise the federal funds rate target range by 25 basis points to 3.75% — 4.0%. In response, Liu Yu, chief economist at Societe Generale Securities, said that after the start of the current interest rate hike cycle, interest rates will probably be raised by at least 25 basis points for the purpose of curbing economic overheating and inflation. The Federal Reserve's bitmap points to another 25 basis point rate hike before the end of this year, which is not much different from market expectations. Whether to continue to raise interest rates in 2027 depends on subsequent US growth and inflation data. For example, AI capital expenditure continues to grow at a high rate, regardless of whether productivity increases or not, there is a high possibility of interest rate hikes in 2027. The end of the interest rate hike cycle may be between 4% and 5%. Due to debt pressure, the probability of interest rate hikes of 5% or more in this round is low, unless it is confirmed that productivity has increased significantly. On the asset side, the Fed raised interest rates to enhance the credibility of the Federal Reserve, help stabilize the long term and flatten the curve in the short term. Looking at the long-term interest rate on US bonds, the rise in long-term interest rates on US bonds is driven by the triple rise in oil prices, fiscal deficit, and AI capital expenditure. However, the two major structural factors of deficit and AI capital expenditure are unlikely to reverse in the short term. There is still a risk that long-term interest rates will continue to rise, and interest rates on 10-year US bonds may rise to the 5.2% to 5.5% range.