Oh? Prices Are Falling!...US Rate Hikes Unlikely, Will the Stock Market Keep Rising [Weekend Money]

Different from the Russia-Ukraine War in 2022

Limited Additional Rate Hikes if Inflation Eases

Positive Impact on the Global Stock Market

There is a forecast that the global economy will re-enter a "disinflation" phase in the third quarter of this year, with inflationary pressures expected to ease.

Kevin Warsh, Chairman of the United States Federal Reserve (Fed).

According to iM Investment & Securities on June 27, while there may be fluctuations in international oil prices during additional negotiations between the United States and Iran, it is highly likely that oil prices will remain in the $70-per-barrel range, making the easing of inflationary pressures more visible. Unlike during the Russia-Ukraine war in 2022, when widespread supply chain disruptions occurred, this time the risks are largely limited to the energy sector, leaving room for inflation risks to subside relatively quickly. Another positive factor is that wage growth in the labor market is being maintained at a lower rate compared to 2022.

If inflationary pressures begin to ease from the third quarter, it appears unlikely that the United States Federal Reserve (Fed) will implement any additional interest rate hikes within the year. Although there were clear hawkish remarks at the latest Federal Open Market Committee (FOMC) meeting, some point out that it is premature to directly link this to another rate hike within the year. Chairman Kevin Warsh has not expressed a clear stance on interest rate policy, and it is uncertain whether the final results from the five task forces he mentioned will be released within the year.

iM Investment & Securities predicted that if the disinflation phase materializes, government bond yields will stabilize somewhat, and any further strengthening of the US dollar will be limited. Recently, despite interest rate hikes by the European Central Bank (ECB) and the Bank of Japan, long-term government bond yields have actually fallen. The company explained that this is due to expectations of disinflation resulting from lower oil prices, which have weakened expectations for additional rate hikes.

Park Sanghyun, a researcher at iM Investment & Securities, stated, "The return of the disinflation phase means a revival in global economic momentum and global liquidity," and added, "In this regard, it will have a positive impact on risk assets such as the global stock market."

This content was produced with the assistance of AI translation services.