Economist at UOB Group Lee Sue Ann comments on the imminent interest rate decision by the FOMC due later on Wednesday.

Key Takeaways

“The US banking sector developments have raised valid concerns on the outlook, complicating Fed’s inflation fight as price concerns are mixed in a pot of financial market uncertainty. If our base case of no systemic impact on the US financial sector remains valid, it is reasonable to expect the US Fed to continue to stay focused on fighting inflation and push forward with its rate hike cycle.”

“Thus, we will continue to see the Fed hiking rates by a final 25bps to 5.00-5.25% at the May FOMC. We expect no rate cuts this year and this terminal rate of 5.25% to last through 2023.”