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Citi: Fed To Hike 50bp In May

FED

Following the March FOMC, Citi continues to see “mainly upside risks to inflation and the aggressiveness with which Fed policy rates and balance sheet reduction may need to move.”

  • Powell suggested there is room to dampen demand and focus on price stability.• “As we have repeatedly emphasized the Fed now desires some combination of higher real rates, lower equity prices and wider credit spreads.”
  • Citi now sees a May QT announcement and implementation in June (was July), but retains a base case for a 50bp hike in May and 200bp hikes in 2022.

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