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Analyst Pin-board The prospect of raising the regulatory interest rates

• Even more hawkish Fed after the September meeting.
• The dong can depreciate 4-5% this year.
• The prospect of raising the regulatory interest rates.

Even more hawkish Fed after the September meeting

During the Federal Open Market Committee (FOMC) meeting last week, the Fed decided to raise interest rates by 75 basis points for the third time in a row with a tough message about tightening monetary policy to contain inflationary. This decision is in line with our expectations, however, the difference is that the roadmap for raising interest rates has changed as reflected in the Fed’s economic forecasts. The Dot plot chart of the Fed's interest rate path on the September meeting shows that policymakers are expecting faster monetary tightening with the Fed rate forecast to rise to 4.4% and 44.6% at the end of 2022 and 2023, respectively, significantly higher than previous forecasts of 3.4% and 3.8%. This means that the Fed could raise rates by 100-125 basis points in the remaining two meetings of 2022. Contrary to previous expectations, the Fed rate in 2023 will continue to rise and the rate hike cycle will only end in 2024.