BNP: 50bp Hikes At Next 2 Meetings

BNP has upped its Fed hiking expectations on the basis of recent hawkish communications from the FOMC in the past week: it now expects 50bp hikes at each of the May and June meetings, with 25bp hikes at the 4 subsequent 2022 meetings and the Funds rate reaching 2.25-2.50% by year-end (a total of 225bp of hikes).

• BNP sees QT launched in May, and rates rising a further 75bp in 2023 to 3.00-3.25% with risks to the upside.
• Going into the March FOMC, BNP had seen 6 25bp hikes in 2022 (ie 150bp of hikes), with QT announced in June, and a further 75bp in 2023 to 2.25-2.50%.
• To BNP, the economic projections released last week were "inconsistent and overly optimistic" - the FOMC's estimates "still seem to regard inflation as a transitory phenomenon that will resolve itself without any need to slow the economy below trend. We tend to disagree."
• BNP even wonders re its updated rate call, if it proves correct, "whether this is enough to bring down inflation sufficiently".