Nomura Is First Bank To Call For 50bps Rate Hike In March

In the past year, Japanese bank Nomura has had a penchant for making several headline-grabbing outlier predictions about the Fed: in June, Nomura was the first bank to call for a 75bps rate hike (a view that quickly became consensus after the infamous Hilsenrath weekend report that blew up the Fed's forward guidance), followed one month later by an even more show-stopping forecast for a 100bps rate hike in July. Verdict: it got one out of two right (the former, not the latter), yet still not a bad track record when the bank takes the bold step to break away from the echo chamber herd.

This week, the bank has done it again, because with the Fed seemingly torn between keeping its 25bps rate hike cadence or expanding it to 50bps to give the tightening campaign a little extra "oomph" after the latest FOMC minutes found that a higher than expected "few" favoed a 0.5% rate hike, Nomura's strategist Aichi Amemiya writes that he now expects a 50bp hike in March followed by 25bp hikes in May and June "as persistent inflation drives the Fed to a more hawkish stance." ---More...