Highlights

• US Fed interest rate outlook: As expected, the Fed increased the federal funds rate by 50bps. We project that it will be increased by 50bps two more times and another one by 25bps for the rate to hover around 2.25–2.50%. The latest PMI readings suggested that the US economy remains healthy enough amidst the Ukraine-Russia war, with input prices and transfer pricing being the biggest concerns driven by labour and material shortages and greater increase in transportation costs.

• The Bank of England interest rate outlook: The BoE hiked its interest rate recently by 25bps to 1.00%, the highest borrowing cost since 2009. We foresee the central bank pausing its rate policy to dampen more downside shocks on the UK economy aside from the fallout from geopolitical tension.

Source: AmInvest Research - 9 May 2022