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Since the decade of the 1970s a strong surge in US inflation had not been seen. Even though there are some similarities between those years and nowadays like the higher inflation of food and energy, the Fed back then was not truly independent and used to favor employment expansion at the expense of inflation.
They will peak once the Fed is done tightening. Slowing demand to bring down inflation without significant pain is “not getting any easier”, but markets (still?) price in a soft landing.
The main goal is to avoid long-run inflation expectations de-anchoring; rates will be at a “modestly restrictive level” by year-end.
We now expect more rate hike front-loading as the FOMC turns more hawkish following persistently high inflation readings from last week.
May 16, 2022
US | Treasury yields and interest rates will likely peak once the Fed is done tightening
Bringing inflation back down to target will likely cause “some pain”; yet, markets are (still) pricing in a soft landing. With the Fed set to hike rates by 50 bps in June and July, the tightening pace is set to be the fastest since the 1994-1995 hiking cycle.
In the United States, after more than a decade in which inflation was consistently below the Federal Reserve's (FED) target, it has risen to levels not seen in 40 years.
We expect the Fed to hike the fed funds rate by 50bps and launch QT amid “much too high” inflation. The aim will be to bring inflation down while achieving a soft-landing of the economy.
This Agenda presents the 2022 dissemination schedule for economic indicators and relevant monetary policy events in Mexico and the US; dates of important events such as the meetings of various relevant international entities such as: World Economic Forum, World Bank and the IMF