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
    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 @Shyon @Success88 @kungpao @CL Wong @Derrick 1234 @MeowKitty @Thonyaunn @紫南 @Zarkness @Ah_Meng @Ratt @Tigress02 @Viv22 @aunteenat @airui @0QH @Cris0 @Brocco @AhGong @deal2deal @Ccl2 @Lcc73 @HLPA @WanEH @markele @pipiso @hlw8888 @Huiz84 @Kingcat @Jo_Tan @RedpillBluep @Furore @breAkdaWn @boardy @Cory2 @Soyabean89 @ngph @KYHBKO
    • johaidi: 
      me
    • ZarknessReplyLMSunshine: 
      Very sad but all political driven… all this artificially inflated figures and such… haizzz
    • AsphenReplyLMSunshine: 
      reversing?
    • LMSunshineReplyZarkness: 
      I know right…that’s why it’s😢
    • Zarkness: 
      They will not set this limit price law . Y?? hahaha… u know it by heart… who controls oil exchanges ?? And where is it at? Once u know this answer … u know why already. Y they did not stop the war ?? Who benefited the most from this? Who sold the most weapons and warplanes ??
  • 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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