Fed Signals Further Rate Hikes; Markets Price 25bp Tightening, Korea's Central Bank Seen Raising Rates to 2.75% on July 16

According to Jin10 data on July 14, markets have nearly fully priced in additional U.S. Federal Reserve rate hikes, with expectations for two increases by end of March 2027. Fed Governor Christopher Waller stated that if core inflation remains elevated, the FOMC may need to consider rate hikes in the near term, while advocating for an inflation target range of 1.5-2.5% rather than the current 2% level.

Meanwhile, 36 of 37 economists surveyed by Reuters expect South Korea's central bank to raise its benchmark rate to 2.75% at its July 16 meeting. Additionally, the European Central Bank's rate hike expectations have been fully priced in, with markets anticipating a 25 basis point increase before September.