[Edaily Reporter kyoungeun kim ] Analysts predict that the domestic stock market will fluctuate this week, with the Federal Open Market Committee (FOMC) and the Bank of Japan (BOJ) monetary policy meetings serving as the key variables. Amid high expectations for a U.S. interest rate hike, analysts say the Federal Reserve’s stance on further rate increases will be a decisive factor.

Cho Jun-ki, an analyst at SKSecurities, made this forecast in a report on the 14th, noting that the likelihood of a U.S. Federal Reserve interest rate hike has increased.
The U.S. August Consumer Price Index (CPI), released after the domestic stock market closed last weekend, showed a month-over-month increase of 0.3% for the core CPI, slightly exceeding the consensus estimate (0.2%). However, the figure generally remained within the range of market expectations.
Researcher Jo explained, “The narrative surrounding a benchmark interest rate hike—fueled by recent strong employment data and rising oil prices—has not shifted back toward a rate freeze,” adding, “Since Fed Chair Wash has significantly reduced preemptive communication with the market compared to the Powell administration, economic indicators and price trends now directly and immediately influence market expectations.”
The biggest events this week are the FOMC and the Bank of Japan’s (BOJ) Monetary Policy Meeting. The U.S. benchmark interest rate appears to be leaning toward a 25 basis point (0.25 percentage point) hike. As the market digested this week’s sharp rise in oil prices and the August U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) data, the probability of a September rate hike rose from around 60% to nearly 90% according to the Chicago Mercantile Exchange (CME) FedWatch, and the projected path now reflects two hikes this year and four by next year.
Researcher Cho noted, “Even if the benchmark interest rate is raised, if the Fed confirms a conservative stance on further hikes, it will be perceived as a ‘dovish hike,’ and I place greater weight on the possibility of a favorable market reaction.” However, he added, “If the Fed were to unexpectedly keep rates unchanged, it could actually have a negative impact.”
The direction of oil prices is also cited as a key variable. West Texas Intermediate (WTI) crude, which rose to a high of $107 last week, fell to around $96 per barrel for indefinite-term futures over the weekend. The peak for WTI during the period when geopolitical risks were at their highest this year was around $118.
Analyst Cho assessed, “In the short term, the main market variables are long-term interest rates and oil prices,” adding, “This is an environment where a significant style rotation could occur depending on oil prices and the FOMC’s tone (whether the path for further rate hikes is limited will determine the direction of long-term interest rates).” He continued, “Assuming oil prices do not rise further, a dovish rate hike is likely to favor high-beta stocks such as growth and tech, while a hawkish rate hike is likely to shift the focus toward value stocks and low-volatility stocks.”