DBS’s Ong Forecasts a Fair Chance of Sept/Dec Rate Hike


Tommy Ong, Managing Director, Treasury and Markets at DBS (HK)

By Emily Lai

The market takes on a summer holiday awaiting the Fed’s decision on the first rate hike. Tommy Ong, Managing Director, Treasury and Markets at DBS (HK)  still thinks it’s a 50/50 chance for a September or December hike, and that uncertainty can partly explain why the market is only taking short-term actions.

“I still believe a December hike is more likely,” Ong tells BENCHMARK. “However, in the past 6 months, the Fed had been emphasizing that if the economic data keeps steady, they would raise rates. As this has been the case, the hike might be brought forward to September.”

Differing from past experience, the US dollar stays strong this time ahead of the rate rise with a 34% increase in the past three years. “This is mainly due to the divergence of expectation of actions from different central banks,” he says. “Even if the Fed starts raising rates, other central banks would not follow and this creates the discrepancy. However, as the old saying goes ‘buy on rumors, sell on facts’ other central banks might slow down on lowering rates after the actual Fed rate hike, so the situation might be turned around.” BM