Fed Unfiltered, Weekly Report: 10/11/22

FOMC – 75bps Still Most Likely at Nov 1-2 FOMC

• Communication/forward guidance from the Fed remains steadfast – inflation is too high, we’ll see between 100-125bps in hikes over the next two meetings (Nov 1-2, Dec 13-14) and no one wants to repeat the rate hike/rate cut approach of the 1970’s, where rate cuts were implemented before inflation was fully addressed.
• 30-Day Window – 75bps Rate Hike.
  • Either a 50bps or 75bps rate hike in Nov – baring an economic event (similar to England’s tax/budgeting financial stability moment), 75bps hike is most likely – front-loading rate hikes still comes up in speeches/interviews.
• 60-Day Window – 50bps Rate Hike.
  • We’re likely to see another 50bps rate hike in Dec, although that’s one GDP report, two Core PCE and two CPI reports away.
• 90-Day Window – Unknown.
  • Fed officials have talked about an additional rate hike in Q1 2023 – the Sept SEP has Fed Funds at 4.60% by YE23, which could mean another 25bps hike at the Jan 31-1 FOMC, although Dec’s SEP will be more telling.