Forecast comes via David Arnaud, senior fixed-income fund manager at Canada Life Asset Management.
On the Federal Open Market Committee (FOMC):
- says an on hold decision in June is likely
- but another hike in July is a possibility, subject to inflation data developments
- Fed only has only a very narrow window to raise interest rates before U.S. recession risks emerge
The European Central Bank is likely to raise interest rates further, base case for the ECB’s peak deposit rate is 3.75%—compared with the current level of 3.25%—, “but there is a very strong chance that we see a 4% deposit rate,”
- “The message coming from the ECB is very different from the one we hear from the Fed,”
- ECB is clearly saying it will deliver more interest-rate rises
- “Inflation in Europe is currently higher than in the U.S., and the prospect of a recession in Europe is not as strong as in the U.S.”
Arnaud was speaking in an interview with Dow Jones. Report is gated.