Commerzbank’s Bernd Weidensteiner asserts that further interest rate hikes by the Federal Reserve are unlikely, despite market expectations for additional tightening. The bank points to declining oil and gasoline prices as factors that should lower U.S. inflation, thereby reducing the pressure for the Fed to raise rates. According to Commerzbank, consumer prices are expected to be even lower in June than in May, with significantly declining inflation rates anticipated in the coming months [1].
Commerzbank maintains its forecast that the Fed will not raise interest rates and suggests that rate cuts could become possible from the summer of 2027, when inflation is projected to be significantly lower. The bank notes that this scenario is not currently being discussed in the markets. Weidensteiner also highlights that the U.S. dollar may come under renewed pressure after the end of the conflict with Iran, as the Fed is unlikely to raise rates as markets have priced in. He further suggests that the Fed may embark on pronounced and potentially excessive interest rate cuts in 2027, partly due to political pressure [1].
Additionally, Commerzbank points out that the dollar is vulnerable because it is significantly overvalued based on purchasing power parity. No immediate market reactions or analyst opinions beyond Commerzbank’s outlook are discussed in the article [1].
CONCLUSION
Commerzbank expects no further Fed rate hikes, citing falling inflation and overvaluation of the dollar. The bank anticipates possible rate cuts starting in summer 2027, which could put additional pressure on the dollar. Market participants may need to adjust expectations for future Fed policy and dollar performance.