Fed Perceived as Behind Curve as Fund Managers Expect Rate Hike

The Federal Reserve is perceived as being behind the curve in terms of monetary policy, according to a recent survey by BofA. A net 25% of fund managers surveyed believe that the Fed's policies are too stimulative, which is the highest figure since September 2022 when the Fed tightened its stance.

This comes at a time when investors expect a flatter yield curve for the first time in four years. In light of this, many market participants are anticipating a hike in interest rates by the Fed, with over 70% odds of a hike priced into the market.

The survey also found that more than half (52%) of respondents do not expect the Fed to hike rates before the US mid-term elections. However, the cut-off date for the survey was September 10, a day before the core CPI data release, which pushed market-implied hike odds above 90%.