The Federal Reserve (Fed) doesn’t see a rate cuts in 2023, according to recent minutes. Yet the markets forecast peak rates as soon as spring. Markets currently view the most likely path as two more small hikes, specifically, a 0.25 percentage point hike on February 1, and a similar 0.25 percentage point hike on March 22. The Fed doesn’t plan to end hikes quite so soon, based on recent projections.
Fed Forecasts
At the Fed’s December meeting policy-makers released forecasts for the level of rates in 2023 via the Fed’s Summary of Economic Projections. Only two of nineteen Fed policy-makers saw rates remaining under 5% in 2023. The base case for markets is currently more of an edge case for the Fed.
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