JPM: Fed Broadly As We Expected

JPM, one of the most hawkish views sampled in our Fed preview (and the only to call for 3 hikes in the 2022 dots), sticks with its call for a June liftoff and 3 hikes in 2022.

• Asset purchases are set to end by March after the pace of tapering was doubled, as widely expected.
• The median dot now looks for 3 hikes in 2022, but the pace of rate hikes doesn’t pick up from there and in fact slows to 2 in 2024.
• Notably, “even the most hawkish participant has just four hikes next year, and only a handful see rates ever getting even modestly restrictive”.
• The median projection is 2-1/8% by end-2024, still below the Fed's 2.5% estimate of neutral.
• While there was a pivot between Nov and Dec, “the projections indicate they do not feel policy needs to be adjusted rapidly”.
• The revisions to the economic forecasts were largely in line with expectations, with notably lower unemployment and higher inflation this year and next.
• “The near-term signal about policy intentions was close to expectation, affirming they are pointing toward liftoff sometime in Q2-Q3 (we continue to expect the first hike in June)”.