Nomura Raises Rate Hike Forecasts Amid Inflation and Geopolitical Tensions
Japanese investment bank Nomura has revised its forecasts for Federal Reserve interest-rate hikes due to elevated oil prices and persistent inflation. The firm now expects the Fed to raise rates this week and in December, followed by a prolonged pause through 2027. This adjustment comes as energy costs surge and progress on curbing inflation remains limited. Nomura also anticipates two additional rate increases from the European Central Bank (ECB) in December and March of next year, citing ongoing inflationary pressures linked to geopolitical tensions like the Iran conflict. The bank expects no further hikes by the Bank of England or People's Bank of China but forecasts three more for the Bank of Japan. The firm’s dovish stance contrasts with market expectations that are pricing in higher rates across several central banks. Nomura attributes its outlook to a combination of near-neutral policy rates, cost-push inflation hurting growth, and tighter financial conditions limiting room for fiscal stimulus.
Topics: central banks Federal Reserve inflation interest rates oil prices