Fed rate lift-off in 2023, with tapering starting early next year – JP Morgan

In a post-Fed communiqué, JP Morgan backs the 2023 rate-hike woes while also expecting the dialing back of the bond purchases from 2022.

“It appears that faster progress toward reopening and higher inflation surprises revealed some hawks on the FOMC,” said JP Morgan.

The investment bank added, “But we suspect that leadership is predominantly anchored at zero or one hike in 2023.”

It’s worth noting that seven members of the US Federal Open Market Committee (FOMC) expect hikes in 2022 and 13 in 2023 during the latest meeting. On the same line, Fed Chairman Jerome Powell said, “Would be prepared to adjust policy if inflation expectation moved too high. Many participants forecast conditions for liftoff will be met sooner than previously thought.”

Following the news, US Treasury yields and the US dollar jumped in reaction to the risk-off mood. However, the latest performance is sluggish.

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