While it’s likely the Fed will begin hiking rates next year due to rising inflation, “I don’t think it means that the Fed’s going to be overly aggressive,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics Inc. “Powell wants a long economic expansion, and to do that the Fed needs to be somewhat patient.”
Earlier this year, economists, including those at the Fed, didn’t expect rate hikes to occur until late 2022 or 2023. But many have changed that call as pressure on consumer prices continues to rise.
“I think that their plan right now probably is three rate hikes next year, four rate hikes in 2023,” David Kelly, JPMorgan Asset Management chief global strategist, said in an interview on Bloomberg Television.
“That means that at the end of 2023 the federal funds rate would be between 1.75 and 2% which is still below inflation. So all we’re saying is the Fed’s getting less dovish here. There are no hawks in the environment at all.”
-With assistance from Liz Capo McCormick.
This article was provided by Bloomberg News.