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Nomura See 100bp Sept Hike, Higher Terminal

FED
  • Nomura see materializing upside inflation risks as likely pushing the Fed to hike 100bp next week (previous forecast 75bp).
  • They continue to see 50bp in Nov but now see another 50bp in Dec vs 25bp previously.
  • Terminal increased 50bps to 4.50-4.75% in Feb'23, with cuts starting Sep'23 at a pace of 25bp/meeting until 1.75-2% end'24.
  • “For some time, we have highlighted an emergence of a wage-price spiral and increasingly unanchored inflation expectations as factors that could keep inflation persistently elevated for longer, requiring a more forceful response from the Fed. With the latest data, we believe those risks are starting to materialize via higher measured inflation across a broad range of goods and services.”

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