- Inflation is high and job market is tight, meaning Fed will likely raise rates higher and longer than expected.
- Fed December 2021 projection was rates would reach 1.75% in 2023, but now 5.25% seems too low.
- Interest rate futures imply Fed will raise target to 5.5%-5.75% this year.
- Fed's assessment of where rates will eventually end up is 2.5%.
- Investors' view of neutral has moved up, 5-year, 5-year forward rate is 3.6%.
WSJ — Markets — Interest Rates — Monetary Policy — Inflation — Economy
Time to Get Used to Higher Rates
Inflation is high and the job market is tight, meaning the Federal Reserve will likely raise rates higher and for longer than previously expected. Investors' view of neutral has moved up, with the 5-year, 5-year forward rate now at 3.6%.