The Fed remains hawkish despite slowing down tightening

En bref

The unsurprising shift to a slower pace of tightening was the only dovish piece of news coming from the last Fed meeting of the year. FOMC members show a strong agreement on the need to raise rates further; the increase in the projected peak rate with respect to September, already anticipated, was stronger than what many (including us) expected.

Highlights:

  • The telegraphed 50 bps rise was followed by a strong and almost unanimous commitment to keep tightening. The FOMC projects a further 75bps tightening in 2023, to 5% to 5.25% peak (a 50-bps increase from what signalled in September), and plans cuts only the following year.
  • Yet the FOMC thinks that a “softish” landing is still possible. Growth projections for 2023 were scaled down, but the increase in expected unemployment is marginal. Inflation should end next year at 3.1% and go back to target only after 2025.
  • The Fed once again disappointed market’s hopes of a softening of its stance and the S&P lost 
    nearly 1% on the announcement.
     

Download the full publication below

The Fed remains hawkish despite slowing down tightening
Picture

© Generali Investments, tous droits réservés. Ce site internet est publié par Generali Investments et est considéré comme une communication marketing et une promotion financière liée aux produits et services des sociétés du groupe Generali suivantes : Generali Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. et Generali Investments Holding S.p.A. (ci-après dénommées ensemble Generali Investments). En outre, le site peut contenir des communications de marketing et de promotion financière de produits et services de sociétés faisant partie de la plate-forme Multi-Boutiques coordonnée par Generali Asset Management S.p.A. Società di gestione del risparmio, et en particulier de Infranity, Sycomore Asset Management, Aperture Investors LLC, Plenisfer Investments SGR, Lumyna Investments, Sosteneo Infrastructure Partners SGR et Generali Real Estate S.p.A. Società di Gestione del Risparmio.