BNP Paribas: Fed Could Raise Rates Up to Six Times
nashnova research
The Fed is expected to deliver its first rate hike of the cycle at the September 16 meeting. BNP Paribas sees up to six hikes ahead — far above consensus — suggesting markets badly underestimate how deep this tightening goes.
How much of this hike is already priced in?
Commonwealth Bank of Australia strategist Carol Kong notes a 25-basis-point hike carries roughly 90% probability in current pricing — delivery alone would give the dollar only a modest lift.
The real volatility trigger is the press conference: if Chair Warsh downplays further hikes, the dollar could slip; if the Fed surprises with no move, the dollar may drop more than 1%.
This means → the hike itself is old news. What the market is actually betting on is how far the hiking cycle runs.
Why is BNP Paribas calling for "up to six" hikes?
Strategist Chandresh Jain expects at least three more hikes, and possibly six, as unemployment heads toward 4%.
In plain terms = the job market is running too hot, inflation won't come down, and the Fed has to push rates higher than most people expect.
BNP Paribas US head Calvin Tse adds: "Given the Fed has already lost some market credibility, we doubt one or two hikes will be enough to restore it."
This reflects BNP's core thesis: hiking is not just about inflation — it is about repairing credibility. Too few hikes, and the market won't believe the Fed is serious.
Warsh was supposed to be a dove — why is he hiking?
Warsh was seen as dovish when President Trump appointed him, but the Iran conflict has driven up energy prices and inflation keeps running hot, forcing a pivot.
This means → political leanings at appointment give way to economic reality. Without hikes, the Fed's inflation-fighting credibility erodes further.
Global bond yields have climbed in tandem, yet cross-country yield differentials have moved little, keeping FX volatility muted. The dollar's rally is concentrated in the past few trading sessions, reflecting rising expectations for substantive tightening.
Can the yen rally last? It comes down to rate differentials
The yen just posted its strongest rebound in months, driven by a hawkish shift in Japan rate expectations, joint US-Japan intervention, and capital repatriation.
Traders price an 80% chance the Bank of Japan hikes on Friday, with 50 basis points of cumulative hikes priced by end-January.
Julius Baer economist David Meier has cut his dollar-yen forecast to 155, but flags a caveat: Japan's political preference for low rates remains an uncertainty.
In plain terms = whether the yen keeps strengthening depends on whether the BOJ actually dares to hike at the pace markets expect — political pressure could slow them down at any point.
What about other Asian currencies?
The Korean won has surged more than 15% against the dollar since late June, fueled by capital inflows and chip-giant profit repatriation.
The yuan holds firm near 6.71, but with China's rate differential to other major economies still widening, the rally has stalled at that level.
This means → the won still has momentum from fund flows, while the yuan is capped by the rate gap — limited upside in the near term.
What is the market actually waiting for?
The key question is no longer *whether* the Fed hikes, but whether Warsh's press-conference language validates the market's pricing of a deeper hiking cycle.
BNP Paribas's "up to six" call represents the extreme end of that question — if Warsh strikes a hawkish tone, markets will reprice toward that scenario.
In plain terms = the 25-basis-point hike is just the opening line. The real trade hangs on the few sentences Warsh delivers afterward.
市场有风险，内容仅供研究参考，不构成投资建议。