Welcome to the FIA News & Insights, a one-stop resource that includes insights from senior investment professionals on timely market events, their views on the economy and their respective markets. Find updates on the latest media information on Frost Investment Advisors, LLC and the most recent reprints, as well as, archival information for your reference.
Fed Raises Benchmark Rate 25 bps, Forecasts Six More Rate Hikes in 2022
The Fed raised its benchmark interest rate by 25 basis points last week, the first increase since 2018. The Fed’s Summary of Economic Projections shed some light on the expected future path of rates and the economy, implying six more rate hikes and inflation over 4% for 2022, both significant increases over earlier estimates. The chart below (called the dot plot) shows where the various members of the FOMC expect rates to be. The members have moved their projected median rate (green line) to 1.9 for the end of 2022 and to 2.8 for the end of 2023. They are also projecting the same rate for the end of 2024, indicating that they currently expect rate hikes will end in 2023. These forecasts are higher than the Fed’s expected long-run rate, suggesting that the 2.8 rate is expected to be temporary.
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