Bank of America economists predict that the Federal Reserve will maintain its current interest rate at the upcoming September meeting, with a potential hike in November. Nevertheless, Howard Du, an economist at Bank of America, cautions that a rate increase after September may result in increased market volatility, particularly in November.
Bank of American research reveals a historical pattern of greater market volatility following Fed interest rate hikes in November compared to those in September.
Traders currently estimate an 88.5% probability that the Fed will keep its interest rate unchanged during its next meeting, while there is a 35% chance that the central bank will raise the rate by 25 basis points, according to CME FedWatch.
In Wednesday's trading session, U.S. stocks experienced declines, with the Dow Jones Industrial Average (DJIA) down 0.3%. Likewise, the S&P 500 (SPX) dipped 0.4%, and the Nasdaq Composite (COMP) fell 0.7%. Meanwhile, the yield on the 10-year Treasury rose by 3.1 basis points to 4.249%, as reported by Dow Jones market data.
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