1034 ET - The markets now expect the Fed to raise rates by 25 basis points next week, but the impact of the hike may be muted, LPL Financial's Jeffrey Roach says in a note. A widening share of economic activity is less sensitive to interest rates, similar to what was seen during the Fed's hiking cycle in 2022 and 2023, the economist says. Demand could remain resilient despite a tighter policy due to surging AI investment and continued spending on travel from affluent consumers, Roach says. He expects nominal economic growth will remain higher than 6% in the coming quarters.
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