The First Rate Hike

A majority of economists surveyed by Bloomberg believe that the Federal Reserve will use their January meeting to telegraph a quarter-point hike in the near future.

• “A majority of the 45 economists in the poll predicted the U.S. central bank will use its Jan. 25-26 policy meeting to telegraph a 25 basis-point increase in its benchmark rate, though two look for a surprise 50-basis-point hike…”

Six months ago two rate hikes would have been seen as aggressive. However, with inflationary pressures holding steady conventional thinking has shifted toward three rate hikes and maybe even four.

• “The economists, surveyed between Jan. 14-19, were about evenly split between expecting the Fed to hike three or four times in 2022”

WOAH: Anna Wong, chief U.S. economist at Bloomberg said, “By mid-year, we expect the FOMC will recognize that they still will need to do more to give the best chance of ultimately achieving their 2% target. As a result, the committee will likely hike five times this year (all 25 basis points).”