Analysts have Raised their Forecasts for Fed Rate Hikes in 2022

The top two major banks in the United States have raised their forecasts for the rate at which the Fed will raise interest rates this year.

Among them, Bank of America (45.87, 0.40, 0.88%) predicted that the Fed may increase the rate of interest rate hikes at all meetings this year in response to Qualcomm (166.81, 5.61, 3.48%) inflation. interest.

“We now expect seven hikes of 25 basis points each this year, with the federal funds rate peaking at 2.75%-3.00%,” Ethan Harris wrote in a note to clients Friday. “This should have a lagged effect on the economy, weighing on growth in 2023.”

JPMorgan Chase (146.61, 1.30, 0.89%) raised its forecast for rate hikes in 2022 from four to five. Chief U.S. Economist Michael Feroli said Fed Chairman Jerome Powell’s remarks at Wednesday’s post-meeting news conference were “clearly aimed at deterring market expectations for quarterly rate hikes.”

Further reading: Powell supports raising interest rates in March, does not rule out the possibility of raising interest rates at each meeting
Powell’s hawkish tone has interest rate futures markets pricing in about five rate hikes this year.

Evercore ISI also raised its forecast for rate hikes in 2022 to five on Friday, but also indicated that it could be as many as seven or as few as three, depending on how the situation develops.

“Right now our base case assumptions are March, May, June rate hikes, July quantitative tightening, September rate hikes, November on hold as inflation cools, December rate hikes,” central bank strategy chief Krishna Guha said in a statement. Colleague Peter Williams wrote in a client note.

Minneapolis Fed President Neel Kashkari was asked in an interview on National Public Radio if three rate hikes, as the Fed’s median December forecast indicated, would be enough, Kashkari replied “we don’t know” and “it would Depends on the supply chain. Depends on the impact on the workforce.”

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Analysts have Raised their Forecasts for Fed Rate Hikes in 2022 - /10

Summary

The top two major banks in the United States have raised their forecasts for the rate at which the Fed will raise interest rates this year.

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