Has the Fed Inadvertently Signaled When Rate Hikes Will End?
11:43:56 AM
Source: Bloomberg Intelligence
Most Fed officials agreed at their gathering this month that the central bank needed to tighten in half-point steps over the next couple of meetings, continuing an aggressive set of moves that would leave policy makers with flexibility to shift gears later if needed. The Fed updated their forecast for inflation as measured by the PCE of 4.3% in 2022 but they lowered their forecast to 2.5% in 2023 and 2.1% in 2024. If their forecast is accurate, it would imply the next expected three half-point rate hikes would be the end of the current tightening cycle and set the stage for a major risk rally into second half of 2022.
