The Fed prepares a rate hike of 75 points in the United States

The United States Federal Reserve (Fed) gets ready for raise the interest rate by another 75 basis points next week (September 20 – 21) to try to stop the runaway inflation that does not let up in that country.

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This is how the main market analysts agree after the publication of the data of the Consumer Price Index (CPI) for August, which showed a slight drop to 8.3% per year, a figure lower than expected by the market and supported by the drop in hydrocarbon prices. However, underlying inflation, that which does not include hydrocarbons or food, continues to rise to historical levels, reaching an annual rate of 6.83%.

“Fed officials have made it abundantly clear that they will not slow the pace of rate hikes until they see convincing evidence that underlying inflationary pressure is easing sequentially. These data mean that the chance of a 50 basis point (bp) hike next week is gone. But the 20% chance of a 100bp increase now seems exaggerated”, analyzed Ian Shepherdson, chief economist at Pantheon Macroeconomics.

(See: US Inflation Slows More Than Expected to 8.3% YoY.)

Among the analysts who already point to this level of increase, the firms Nomura Securities and the CME Group stand out.

“If I had to choose between 100 basis points in September and 50 basis points, I would choose a 100 basis point move to bolster credibility”, Lawrence Summers, former US Treasury Secretary, wrote on his Twitter account.

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Nevertheless, Not everyone on Wall Street is aligned with this possibility. “A rise of 100 basis points can be perceived as a panic move”, warned Steve Sosnick, chief strategist at Interactive Brokers, quoted by the Bloomberg agency.

For his part, Edward Moya, an economic analyst at Oanda, pointed out that, in his opinion, the markets “they no longer trust the Fed to only deliver a 75 bps hike this month, a half point hike in November and a 25 bps hike in December”, so it seems likely that the monetary body “have to be even more aggressive” with rate hikes, which may dampen the appeal of risky assets.

The price of the barrel of reference Brent, for delivery in November, ended this Tuesday in the London futures market at US$93.24, 0.78% less than at the end of the previous session.

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North Sea crude, a benchmark in Europe, ended the day at International Exchange Futures down US$0.73 from the last trade, when it closed at US$93.97.

The US dollar, the currency in which oil futures are traded, rallied against other currencies after reports of falling US inflation in August, weighing on trading in the London futures market, according to analysts.

That scenario stopped the rise of Brent after three consecutive days on the rise, which have led it to return to above the psychological barrier of US$90 per barrel.

Meanwhile, WTI crude closed Tuesday’s session down 0.5% to $87.31 a barrel.

PORTFOLIO AND EFE