CITIC Securities: Expects the Fed to raise rates by another 25bps this year, and may hold steady next year.

CITIC Securities research report believes that the Federal Reserve raised rates by 25bps as expected in September, upgraded this year's growth and inflation forecasts, and both the dot plot and Warsh's remarks released hawkish signals. Strong market expectations pressured the Fed, making the rate hike a choice the Fed went along with. The pace and magnitude of the Fed's subsequent rate hikes will depend to a large extent on oil prices, which is difficult to predict, but given that headline inflation year-over-year may decline significantly early next year, by then the case for continuing to raise rates should weaken. We expect the Fed to raise rates by another 25bps this year and likely stay on hold next year.