![]() ![]() Ultimately, any decision to pause will be driven by an assessment that the Fed’s policy is working, which means some indication that U.S. That’s what's helped support a recent rally in stocks since mid-October. The market’s current assessment, which could of course change, is that a pause is coming in the first half of 2023. It’s these early 2023 meetings when the markets expect the Fed to finesse its approach to any pause in monetary policy. Then the Fed sets rates again on March 22, and skips the month of April to meet again on May 3. However, the first scheduled interest rate decision of 2023 comes on February 1. Yes, there are meetings in November and December 2022. Fed Meeting Dates For 2023Īlso, remember that the Fed does not meet each month. However, markets also see a fair chance that rate hikes end as soon as February or doesn’t happen until early summer based on current interest rate futures. One scenario is a ‘tapering’ of rate hikes with 0.75 percentage points in November, 0.5 in December and 0.25 in February, and then the pause hits. ![]() This is where the markets are anticipating a pause. However, the Fed’s 2023 decisions are clearly in play. It’s also probable we’ll see another large hike in December, perhaps 0.5 percentage points. It’s likely we’ll see a 0.75 percentage point hike at the Fed’s November meeting. What To Expect From the Fed In 2023Īs always, the Fed manages expectations carefully. That likely won’t bring inflation back to the Fed’s 2% target, but may suggest inflation is easing. The markets are betting that we’ll start to see some better inflation numbers at some point in the next 4 months or so. Ultimately it comes back to data, and probably inflation data. Still, many expect the Fed’s policies and other factors to tame inflation in 2023. In fact core inflation remains stubbornly high on recent CPI data. The Fed haven’t seen too many direct signs that inflation is coming down yet in inflation reports. If the Fed does stop too early, that could cause more problems for the U.S. Coming back to the concept of entrenched inflation, the Fed does want to make sure that inflation in the U.S. That may not possible, but continuing to rise rates too far, may make any potential recession deeper and more painful than it needs to be in order to combat inflation. Still, it would like to avoid a recession, if it can. The Fed currently worries more about entrenched inflation than it does about a recession. recession may be coming, including weakness in housing and the recent shape of the yield curve. ![]() We should note that there are lot of indicators that a U.S. has a higher ratio of government debt to GDP than the U.K. recently saw, where the markets started to lose faith in its ability to keep its debt under control. ![]()
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