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Williams On Definitely Needing Rates of 3-3.5% This Year

FED
  • Speaking for the first time since the Jun 14-15 FOMC on a CNBC interview, NY Fed’s Williams adds to similar commentary from other FOMC members in seeing a 50 or 75bp hike up for debate at the July meeting.
  • He sees there being “definitely need to get rates to 3-3.5% this year” and “hiking to somewhat restrictive rates in 2023”.
  • That range covers current market pricing with FOMC-dated Fed Funds futures pricing an implied rate of 3.26% for the Nov meeting and 3.46% for Dec, on the way to peaking at 3.62% at the Mar’23 meeting before 35bps of cuts to end-2023.
  • He sees the economy as strong, forecasting GDP growth of 1-1.5% in 2022 with recession not a base case, with slowing in rate-sensitive sectors like housing.

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