- 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%.
Time to Get Used to Higher Rates
Interest rates could stay elevated in a way not seen since before the financial crisis
Justin Lahart
