Regarding the Federal Reserve, analysts at Wells Fargo, in line with market consensus see a cumulative 125 bps of rate hikes during 2022 and 2023. They expect an initial 25 bps rate hike during the third quarter and a cumulative 125 bps of rate hikes being completed by the third quarter of 2023.
Key Quotes:
“The Federal Reserve has become increasing concerned about persistently high inflation pressures and, as a result, has initiated and accelerated the tapering of its bond purchases, as well as accelerating its rate hike intentions. For the December month, the Fed's overall bond purchases will amount to $90 billion. Consistent with its December announcement, we forecast the Federal Reserve will lower its bond purchases by $30 billion in each of January, February and March next year, bringing its quantitative easing to end by March 2022. In addition, we expect the Federal Reserve to begin raising interest rates by the second half of 2022, and we forecast a cumulative 125 bps of rate increase, in increments of 25 bps per quarter, starting in Q3-2022 through until Q3-2023.”
“The outlook for a steady, and quite timely, removal of monetary policy accommodation stems from ongoing above-trend GDP growth and continued improvement in the labor market. For U.S. GDP, we see growth of 5.7% in 2021, 4.4% in 2022, and 3.0% in 2023—though even that 2023 forecast is above the potential growth rate of the economy.”
“We expect PCE inflation and core PCE inflation—the Fed's preferred measured—to remain at or above the Fed's 2% target right up until late 2023. The combination of above-trend growth and above-target inflation underlies our outlook for the steady removal of monetary policy accommodation.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD holds above 0.6600 ahead of the RBA Premium
AUD/USD rose on Monday ahead of a crucial day for the Aussie with the Reserve Bank of Australia's decision. The central bank is expected to keep rates unchanged at 3.85%, but it's a close call, and a rate hike wouldn't be a major surprise.
EUR/USD struggles to defend corrective bounce off 1.0700
EUR/USD retreats towards 1.0700 amid the early hours of Tuesday’s Asian session after a volatile day. That said, the Euro pair initially cheered the downbeat US data before paring the gains and closing the day around the week-start levels.
Gold grinds higher past $1,950 amid downbeat United States data
Gold stays on the front foot aroud $1,961, after an upbeat start of the week, as the bullion traders seek more clues to extend the latest rebound during early Tuesday in Asia. The precious metal cheered downbeat United States statistics and dicey markets to regain upside momentum the previous day.
TRX, ADA price fall over 5% as Tron and Cardano founders show support for Binance and CEO
Tron (TRX) and Cardano (ADA) prices are down by more than 5% each as the two altcoins follow in the footsteps of Binance Coin (BNB), which fell 10% after the US Securities and Exchange Commission (SEC) filed a civil complaint against Binance and CEO Changpeng Zhao (CZ).
June flashlight for the FOMC blackout period
After raising rates by 500 bps since March 2022, the FOMC signaled at the conclusion of its previous meeting on May 3 that the tightening cycle may be coming to an end.