A resilient US economy will prompt the Federal Reserve to pencil in one more interest-rate hike this year and stay at the peak level next year for longer than previously expected, according to economists surveyed by Bloomberg News.
The Federal Reserve is set to disappoint Wall Street as it keeps rates at their peak throughout 2023, dashing hopes markets have priced in for rate cuts in the second half and making a recession very likely.
Wall Street’s biggest banks agree the Federal Reserve will hike US interest rates further into next year, but are at odds over how high it will take them and whether it will be cutting by the end of 2023.
A strong dollar is likely to weigh negatively on the US economic outlook and could alter how high the Federal Reserve ultimately raises interest rates, economists surveyed by Bloomberg said.
Federal Reserve officials will maintain their resolutely hawkish stance next week, laying the groundwork for interest rates reaching 5% by March 2023, moves that seem likely to lead to a US and global recession, economists surveyed by Bloomberg said.
Five new Federal Reserve policy makers are seen as having a slightly greater focus on employment than inflation, but don’t expect a swift impact from this dovish tilt, economists surveyed by Bloomberg said.
Federal Reserve officials will signal a more hawkish stance next week, with interest rates reaching 4% by December and staying high through 2023, economists surveyed by Bloomberg said.
A shift is underway at the Federal Reserve in how to describe neutral -- the interest-rate level that neither stimulates nor restrains growth -- as it debates how much higher to hike.
Federal Reserve Chair Jerome Powell is likely to slow the pace of interest-rate increases after front-loading policy with a second straight 75 basis-point hike next week, economists surveyed by Bloomberg said.
Federal Reserve policy makers are expected to announce this week that they will start scaling back their massive asset-purchase program amid greater concern over inflation, economists surveyed by Bloomberg said.
The Federal Reserve is expected to announce it will begin trimming its $120 billion in monthly asset purchases before the end of the year as the U.S. economy recovers strongly from Covid-19, according to economists surveyed by Bloomberg.