1Y Anniversary of Rate Hike - When Will Fed Stop and Pivot?

Tiger_comments
2023-03-03
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It was a year ago this month that the Fed launched its rate hike to combat inflation.

At first, policymakers only take 25 basis points to tackle price surges. Subsequent months saw much larger hikes, enough to raise the Fed’s benchmark borrowing rate by 4.5 percentage points to its highest level since 2007.

At this 1 year anniversary, we can review these questions:

  1. what's the end of the rate hike cycle?
  2. when will Fed stop rate hikes and turn to rate cuts?
  3. what's the target rate for March?

1. What’s the end of this rate hike cycle? - 5.5% is a consensus

The benchmark rate currently ranges between 4.5% and 4.75%.

Markets figure the Fed will take that rate up to a range between 5.25%-5.5% before stopping, according to futures trading data.

Swaps markets are pricing a peak Fed policy rate of 5.5% in September while some traders are betting the benchmark interest rate could rise to 6%.

Kashkari reiterated that in December he saw the fed funds rate rising to as high as 5.4% in this tightening cycle. Financial-market bets for the peak rate reached 5.5% Wednesday.

2. When will Fed stop rate hikes and turn to rate cut?

1)  Stop rate hikes in summer?

US stocks stopped losses after Federal Reserve Bank of Atlanta President Raphael Bostic said

the central bank could be in a position to pause rate hikes sometime this summer.

While Bostic’s remarks boosted sentiment Thursday, other central-bank officials in recent days have reinforced their hawkish rhetoric.

2) Won't cut rates in 2023?

In January, the market expected the last rate hike of 25bps in March and a rate cut at the end of the year. However, the reality was contrary to expectations.

Based on Fed rate futures pricing, the market has widely expected the end of the current rate hike cycle at 5.25%-5.5% and little chance of a year-end rate cut.

3. How much will Fed increase in March?

As of today, there are 74.8% probabilities that Fed will increase 25 bps. However, the probabilities will change after the CPI.

Some Fed officials also expressed that they may support 50bps in March.

Minutes from the Jan. 31-Feb. 1 FOMC meeting showed that“a few”participants favored or could have supported a 50 basis-point increase.

How do you view 1-year anniversary of rate hikes?

How do you expect March rate hikes?

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Comments

  • LMSunshine
    2023-03-04
    LMSunshine
    Win 200 Tiger-coins
    Dear Powell, I expect you to raise interest rates by 50bps because you’re a🦅 I actually don’t understand why there isn’t a better way to control inflation rather than rate hikes…you’re actually making the bank rich till they can give fat dividends in 2023 and making poor people lose their jobs and not have💵 to pay their 🏡mortgage😢 Businesses are abusing “inflation+high interest rates” to raise prices because price increase is more than the reported inflation rate.When inflation comes down,my Chup-Cai-🍚 will not drop price😓 Just set a law to limit prices of all the things like oil and gas that’s causing inflation and limit each family’s spending…Come join@SR050321 @CYKuan @HelenJanet @rL @Universe宇宙 @Jadenkho @melson @Mrzorro @GoodLife99 @SPOT_ON @Kaixiang @BenjiFuji @RDPD富爸穷爸 @SirBahamut @b1uesky @MHh @PJoo @Pepermintpat @RiciaYang @jat @Omega88 @爱上投资学 @Zeniv @Elon2 @Yonhuat @Joker_Smile @grizzlylee @FrankieRed @spkek @snoopy123 @psk @pekss @amroui @Ericdao @StickyRice @StarLuck
  • LMSunshine
    2023-03-04
    LMSunshine
    Win 200 Tiger-coins
    亲爱的鲍威尔，我希望你提高利率50个基点，因为你是一个我真的不明白为什么没有比加息更好的方法来控制通货膨胀…你实际上是让银行变得富有，直到他们可以在2023年给予丰厚的股息，让穷人失去工作，没有💵来支付他们的🏡抵押贷款😢企业滥用“通货膨胀+高利率”来提高价格，因为价格上涨超过了报告的通货膨胀率。当通货膨胀下降时，我的Chup-Cai-🍚不会降低价格😓只是制定了一项法律来限制所有东西的价格，如石油和天然气。这导致了通货膨胀，限制了每个家庭的消费……快来加入@Shyon@success 88@kungpao@CL Wong@Derrick 1234@MeowKitty@Thonyaunn@@Zarkness@Ah_Meng@Ratt@tigress 02@viv 22@aunteenat@airui@0 qh@cris 0@Brocco@AhGong@deal 2 deal@ccl 2@lcc 73@HLPA@WanEH@markele@pipiso@hlw 8888@huiz 84@Kingcat@Jo_Tan@RedpillBluep@Furore@breAkdaWn@boardy@cory 2@soyabean
    • johaidi: 
      我
    • ZarknessReplyLMSunshine: 
      非常悲伤，但都是政治驱动的…所有这些人为夸大的数字和诸如此类的…海兹
    • AsphenReplyLMSunshine: 
      倒车？
    • LMSunshineReplyZarkness: 
      我知道对…这就是为什么它是😢。
    • Zarkness: 
      他们不会制定这个限价法。Y？？哈哈哈…你烂熟于心…谁控制着石油交易所？？它在哪里？一旦你知道了这个答案…你已经知道为什么了。他们没有停止战争？？谁从中受益最大？谁卖的武器和战机最多？？
  • LMSunshine
    2023-03-04
    LMSunshine
    Win 200 Tiger-coins
    Dear Powell, I expect you to raise interest rates by 50bps because you’re a🦅 I actually don’t understand why there isn’t a better way to control inflation rather than rate hikes…you’re actually making the bank rich till they can give fat dividends in 2023 and making poor people lose their jobs and not have💵 to pay their 🏡mortgage😢 Businesses are abusing “inflation+high interest rates” to raise prices because price increase is more than the reported inflation rate.When inflation comes down,my Chup-Cai-🍚 will not drop price😓 Just set a law to limit prices of all the things like oil and gas that’s causing inflation and limit each family’s spending…Come join @Kok @Agxm @Dodonan @BubTigger @Niskil @OddEyeCircle @StarAce @zerolih @WuDi @Asphen @MasterStonker @MoneyCub @MiniAce @StayCalm @ee244c @Huangyulee @tarotsgirl @Lord_Kuberan @ShengSoon @jllwang @Shiella @cristine @Gunawanh @WLing @Zash @Snoopymint @GrumpyDino @YTGIRL @VivianChua @MSJYJ @YJ13 @Bons @bernardtayet @Kindryl
  • LMSunshine
    2023-03-04
    LMSunshine
    Win 200 Tiger-coins
    Dear Powell, I expect you to raise interest rates by 50bps because you’re a🦅 I actually don’t understand why there isn’t a better way to control inflation rather than rate hikes…you’re actually making the bank rich till they can give fat dividends in 2023 and making poor people lose their jobs and not have💵 to pay their 🏡mortgage😢 Businesses are abusing “inflation+high interest rates” to raise prices because price increase is more than the reported inflation rate.When inflation comes down,my Chup-Cai-🍚 will not drop price😓 Just set a law to limit prices of all the things like oil and gas that’s causing inflation and limit each family’s spending…Come join @angyenyen @KBWSG @JazzyTizzy @Cyberguard @kaite @BlueDragon @Tonyoh @aiyoh79 @drandy @AlfonsoDex @nerdbull1669 @InvisibleTig @AlanTiger @kwk @InvisibleP @miaomiao007 @TigerHulk @eeth @MGOH @Alconies @justforcoins @cubinvestor @我i168 @Zack44 @Zacv @ZeroG @JennyChiang @Star0331
  • LMSunshine
    2023-03-04
    LMSunshine
    Win 200 Tiger-coins
    Dear Powell, I expect you to raise interest rates by 50bps because you’re a🦅 I actually don’t understand why there isn’t a better way to control inflation rather than rate hikes…you’re actually making the bank rich till they can give fat dividends in 2023 and making poor people lose their jobs and not have💵 to pay their 🏡mortgage😢 Businesses are abusing “inflation+high interest rates” to raise prices because price increase is more than the reported inflation rate.When inflation comes down,my Chup-Cai-🍚 will not drop price😓 Just set a law to limit prices of all the things like oil and gas that’s causing inflation and limit each family’s spending…Come join @Fenger1188 @hengsley @Aqa @REWARD share @Squ00 @KH321 @DannDann @AaronJe @sgFIREmm @MrHuattt @Zlatan @OldCitron
  • koolgal
    2023-03-05
    koolgal

    🌟🌟🌟As we mark 1 year anniversary of rate hikes, it has been a turbulent year for many investors in the markets.  It seems like the volatility will continue unabated in 2023 as inflation is still high and the Feds are intent on quelling it to its target of 2%.

    All eyes will be on Jerome Powell as he takes the stage on March 15 to deliver the much anticipated news of the latest rate hikes.  I believe it will be 25bps.  However 50 bps is a possibility if the majority of the FOMC panel vote for it. 

    The markets are fragile, so is the global economy with the possibility of recession. The Feds is walking a tight rope trying to balance the pace of interest rate hikes without causing a recession.  But it is an inexact science. 

    Whatever the outcome maybe, I will continue to stay invested in good quality stocks with a long term horizon which I believe is the best way to attain my goal of FIRE - Financial Independence Retire Early!

    @Tiger_chat  

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