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VIEW: Scotiabank Pull Fed Hiking Cycle Call Higher

FED

Scotiabank now “believe the Federal will need to hike its policy rate to 5.00% by early ’23, 150bp more than our previous forecast.”

  • “It is clear that the Federal Reserve is less forward-looking and more data-dependent than reaction functions typically assume.”
  • “Inflation has remained stubbornly elevated, and the most recent monthly prints do not suggest a cooling of pressures despite a large reduction in some of the upstream drivers of inflation.”
  • “Confidence in inflation forecasts is low. This has prompted the Fed to indicate through its dot plot that it plans to hike interest rates to 4.50% by the end of this year. While we normally don’t pay too much attention to the dot plot, the fact that the Fed is communicating a need for such a tightening in just under three months gives them very little room to not follow through on this guidance.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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