BNP Paribas: Lower Probability of Fed Action in July

Odaily Planet Daily reports that BNP Paribas Chief Economist Isabelle Mateos y Lago stated: "If July's non-farm payroll numbers are very strong, close to or exceeding 130,000, then I believe the July meeting will be full of suspense. Currently, the level of uncertainty may not be as high, but in my view, the rationale for the Fed to raise rates still holds." Ahead of the July 4 holiday, the short-term interest rate futures market predicts about a 20% probability of the Fed raising rates during its July 29 rate decision, down from 33% before the release of the non-farm payroll report. The market still expects the Fed to raise rates by 25 basis points this year, but the earliest hike is likely to occur in December. Regarding the European Central Bank (ECB), Lago stated: "The baseline expectation remains that there will be another rate hike in September. However, it is worth noting that members of the Governing Council who spoke at the Sintra meeting did not rule out the possibility of foregoing this additional rate hike." She warned that the normalization of energy supplies could take six months or longer to take effect, and inflation in the Eurozone may accelerate again. Even so, she believes that outside of regions affected by energy issues, consumer prices in other areas will not face significant pressure. (Jin10)