Mitsubishi UFJ believes that the market is still on the aggressive pricing path of interest rate hikes, but it is expected that the interest rate hike cycle will be lengthened. There is still a possibility of interest rate hikes at the December meeting, but it is unlikely that the Federal Reserve will raise interest rates in 2027. The federal funds rate futures market was not fully priced until January 2027 to raise interest rates once; future trends this year are still full of uncertainty. If hawks suspend interest rate hikes at the October FOMC meeting, the probability of interest rate hikes in December is expected to rise to more than 80%, but economic data and financial conditions indices during this period are critical. The Mitsubishi UFJ believes that overall, whether to raise interest rates in 2027 depends on the second-round inflationary effect brought about by diesel prices and whether AI-related inflationary pressure subsides; 3 hawkish members will leave office in 2027, making it difficult for the Federal Reserve to fulfill the rate hike implicit in current futures pricing.

Mitsubishi UFJ believes that the market is still on the aggressive pricing path of interest rate hikes, but it is expected that the interest rate hike cycle will be lengthened. There is still a possibility of interest rate hikes at the December meeting, but it is unlikely that the Federal Reserve will raise interest rates in 2027. The federal funds rate futures market was not fully priced until January 2027 to raise interest rates once; future trends this year are still full of uncertainty. If hawks suspend interest rate hikes at the October FOMC meeting, the probability of interest rate hikes in December is expected to rise to more than 80%, but economic data and financial conditions indices during this period are critical. The Mitsubishi UFJ believes that overall, whether to raise interest rates in 2027 depends on the second-round inflationary effect brought about by diesel prices and whether AI-related inflationary pressure subsides; 3 hawkish members will leave office in 2027, making it difficult for the Federal Reserve to fulfill the rate hike implicit in current futures pricing.