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US Federal Reserve may surprise markets on Wednesday - Bank of America
Bank of America admits US Federal Reserve may unexpectedly raise rates at its December 15 meeting
Dec 15, 2021
1 min read
Anna BakkerNews analyzer

This decision could shock the markets.

The Fed could surprise the markets and raise its key rate as early as its December meeting, said Michael Hartnett, chief investment strategist at Bank of America. He recommends that investors "quickly sell shares" and not "buy them back in the event of a downturn," RBC writes.

According to Hartnett, if the regulator does not raise rates at the meeting on Wednesday, in March next year it will have to do it twice (by 0.50%) due to the overheating of the labor market.

If Hartnett's expectations come true, the rate hike will shock Wall Street, as most market participants expect the regulator to start raising rates no earlier than the second half of 2022.

Hartnett also notes striking similarities between the current performance of tech stocks and the 2000 dot-com bubble.

In his opinion, the current fall in shares of the Disruptive Innovation Ark Invest fund is exactly the same as the fall in Invesco shares during the 2000 dot-com crash.

Ark Invest founder Katie Wood herself has previously defended her fund's investment strategy and expects earnings to rise.

Morgan Stanley's updated forecast for 2022 predicts significant strengthening of the dollar against the euro and yen. The bank expects two rate hikes: in September and December.

JPMorgan predicts a Fed rate hike in September 2022.

According to two former FRB presidents, William Dudley and Jeffrey Lucker, the Fed will have to raise rates to at least 3% to curb inflation.

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