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BMO Now Sees Five 2022 Hikes, Sees Risk Of Even Quicker Rises

FED

BMO has joined the growing number of analysts looking for 5 25bp Fed funds hikes this year, and see risks very much to the upside.

  • indeed, "one got the sense that the Fed could have easily raised policy rates [at last week's FOMC meeting]...if not for the formality of having to proffer forward guidance first and the technicality of having to wind down asset purchases beforehand".
  • BMO now sees the Fed starting the hiking cycle with 3 consecutive increases in March, May and June, "and, yes, during this initial flurry, a 50-pointer is a distinct possibility" -before shifting into quarterly hikes, meaning 5 hikes total this year (previously 4), with a terminal rate of 2.375%.
  • And "the net risk lies on the side of an even quicker rate hike cadence to an even higher ending level. And, this net risk is large."
  • BMO now sees QT starting in July (was October previously).
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