Fed Unfiltered, Weekly Report: 11/21/22

FOMC – Still on Track for a 50bps Hike at the Dec Mtg

• Rate Hikes: With ongoing comments about a terminal rate of 5.00% (or higher), the stepping down to a 50bps hike and wrapping up rate hikes early next year – 50bps is still most likely in Dec.
• Pace of Hikes: After Dec, expect a slower pace of rate hikes and a drop back to the 25bps level as Fed officials assess the impact of rate hikes on inflation – it takes between 12-24 months for rate hikes to impact inflation – the clock started Dec 2021, as rates started increasing with forward guidance.
• Sufficiently Restrictive: Although currently undefined, on Wed Mary Daly said it would be about 5.25% and Bullard on Thurs put it as high as 7.00% – expect a robust debate the next few weeks.