DB: Fed to hike 50bps this year

Research evidence excerpt

DB: Fed to hike 50bps this year

Deutsche Bank

Research

Economics Date

DBDaily 22 June 2026

Phil Odonaghoe

Change in DB’s Fed call: 25bp hikes in Sep & Dec; JPY into Economist

intervention territory; weather boost for UK retail; US core PCE +61-2-8258-1606

deflator this week

**US macro podcast. Listen as Matt Raskin and Matt Luzzetti outline their key

takeaways from Kevin Warsh’s first meeting as Fed chair. 30 minutes, here.

European equities were a bit softer Friday, Stoxx600 closed 0.2% lower. With US

markets closed for a holiday, oil ended a shortened session up 0.9% at

USD80.57/bbl (Brent).

Canada retail sales missed, up 0.5%mom at the headline (consensus 0.6%mom).

Core at 0.1%mom, consensus at 0.8%mom.

UK retail sales beat, headline up and core both up 1.2%mom in May. The solid

beat here was helped by hotter weather (statistician noted a boost in sales of

outdoor furniture and fans). Will boost GDP trackers for Q2.

Japan CPI in line, up 1.5%yoy in May, core core at 1.8%yoy.

Matt Luzzetti has changed his call for the Fed and now expects 25bp hikes in

September and December. Previously, Matt expected no change in rates from the

Fed this year. The change in view comes after new Fed Chair Warsh affirmed the

hawkish tilt at the June meeting by emphasizing a commitment to “fix” the

ongoing inflation problem. Risks are two-sided: on the hawkish side, a July hike is

possible, and 75bps of increases might be necessary to fully unwind the insurance

provided through rate cuts last year. On the dovish side, declines in energy prices

and near-term inflation expectations could reduce the urgency to act.

USD/JPY is close to a 4-decade high, notes Tim Baker, in the wake of the hawkish

Fed and not-so-hawkish BoJ. Japan intervened at a lower level than this 6 weeks