‎Analysts expect Federal Reserve to hike interest, higher rates to weigh on firms with high debts

‎Analysts expect Federal Reserve to hike interest, higher rates to weigh on firms with high debts

The US Federal Reserve is expected to increase interest rates by 25 basis points (bps) up to six times this year to contain inflation rates, which hit the highest level in 40 years last February, analysts told Argaam.

The higher policy rate will be reflected on the performance and results of the banking sector, which positively finances companies.

Mazen Al-Sudairi, Head of Research at Al-Rajhi Capital, said most analysts expect the US central bank to hike policy rates six times by the end of 2022.

The rate will be hiked to go in tandem with the rise in inflation, after inflation forecast signaled a 7% rise, compared to the annual average of 5%.

Moreover, the US central bank’s attempts to contain inflation reflects its serious efforts in this regard, especially as the jobless rate is less than 4%, Al-Sudairi added.

Elsewhere, Iyad Ghulam, Head of Equity Research at SNB Capital, said the geopolitical developments and implications of the Russia-Ukraine war have been the key driver for markets recently.

Inflation was the biggest challenge before the emergence of this crisis in Europe; therefore, raising the policy rates was important, Ghulam told Argaam. Inflation is on the rise, hitting record highs, particularly in the US, he added, pointing