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Danske: Now Expects 5 Hikes In 2022, Earlier QT Start


Danske now expects 5 Fed hikes in 2022 vs its previous expectation for 4, in light of the January FOMC outcome.

  • Those hikes: March, May, June, September, and December, with risks tilted toward more (every meeting is “live”). Danske still sees 4 hikes in 2023.
  • Danske also pulled forward QT timing: to start in June (vs Sept previously).
  • While the statement was expected, “Powell sounded more hawkish than expected emphasising the risks that inflation stays elevated, not ruling out 50bp rate hikes and indicating that every meeting is “live” (among other things).”
  • Danske compared this hawkish shift to the “emerging market central banks playbook” wherein Hungary, Poland, Czech have tightened more expected.

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