Dot Plot show Fed anticipates more hikes in 2023 to 4.50 percent

I have to admit that a year ago I did not foresee this. But here we are.

The key question is not where we’ve been but where we are headed. I Highly doubt the Fed hikes another 1.25 percentage points this year or gets anywhere close to 4.50 to 4.75 percent in 2023.

The FED will remain on auto-pilot with rate hikes until something other than housing or the stock market breaks.

expect everything to break at once

The Fed participants have a median expectation of 4.25 to 4.50 percent for the end of 2022.

That’s another 1.25 percentage points more this year.

The Fed then anticipates one more hike in 2023 to 4.50 to 4.75 percent.

Stock market is experiencing an “orderly” decline and the housing market has just started its decline. This is actually what the Fed wants.

What would worry them is if illiquidity issues arise in the Treasury/repo and credit markets

But the Fed currently has Standing Repo Facility (SRF) operations, central bank swap lines, and Foreign and International Monetary Authorities (FIMA) Repo Facility to minimize these risks.


Rate hikes operate with a lag, so multiple things will break at once.

Others disagree but I think it’s a given the Fed makes a rare mistake of tightening too much.

The Fed will once again chase its tail, this time from the opposite end, tightening too much, too fast.