Santander Forecasts Fed Rate Hikes in September and December

Santander reaffirms expectations for two further Federal Reserve rate increases, projecting a funds rate range of 5.75%-6.00% by year-end, defying current market pause pricing.

Woofun AI reports that Santander has maintained its forecast for Federal Reserve interest rate hikes in both September and December. The bank anticipates the benchmark federal funds rate will rise to a range of 5.75%–6.00%, citing persistent inflation pressures despite recent economic data. This outlook diverges from futures market pricing, which currently implies a higher probability of a policy pause in September. Santander argues that the July Consumer Price Index report, showing headline inflation at 3.2% year-over-year, is insufficient to alter the central bank's restrictive stance. The bank expects the Fed to prioritize its 2% inflation target over potential economic slowdown risks, maintaining a hawkish posture contrary to many market observers who anticipate easing by early 2024.