Free Trial

UBS: Now Seeing 4 2022 Hikes, Though Fed To Aim For H2 Optionality


UBS has changed its view on FOMC tightening, and is now looking for 4 hikes in 2022: Mar, Jun, Sep, Dec (that's up from 3 previously, with the addition being Dec).

  • Following this, they are looking for 2 hikes in each of 2023 and 2024, "because we expect inflation slows to below 2% headed into 2023, the FOMC can take a breath, refocus on the labor market, and pursue a slower path to neutral".
  • They continue to expect balance sheet runoff announced and begun in 1H 2022, "July at the latest"; their central outlook is for a March hike, May runoff announcement, June hike, retaining "desired optionality for the second half of 2022".
  • On risks: "If inflation indicators fail to show signs of moderating as the FOMC hopes, we would expect the Committee to transition from a quarterly pace to an every meeting hike pace, or something in between.... Of course the opposite is true too, and weakness could give the FOMC pause."
  • Note, this view change was made earlier this week, pre-ECB/BOE and Friday US payrolls.

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.