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NatWest Brings Forward Rate Liftoff Date View

FED

NatWest now expects the FOMC to begin raising rates in September 2023, vs its previous expectation of March 2024 (which had been one of the furthest-dated views on the sell-side).

  • They cite post-June FOMC meeting communications from Fed officials as "more hawkish than expected", including the dot plot shift showing two rate hikes in 2023, and Powell noting potential upside inflation risks.
  • NatWest notes that they are pulling their hiking forecast forward "even though the Fed's reaction function is going to be slower than previous rate hike cycles".
  • On tapering, they expect talk to "increase significantly over the course of the summer", including a discussion of a "game plan" at the July and Sep FOMC with a formal announcement of the details later in the year.

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