The Fed raises rates – let the inflation battle begin

2022 | 2023 | 2024 | Longer run | |
---|---|---|---|---|
Change in real GDP | 2.8 | 2.2 | 2.0 | 1.8 |
December projection | 4.0 | 2.2 | 2.0 | 1.8 |
Unemployment rate | 3.5 | 3.5 | 3.6 | 4.0 |
December projection | 3.5 | 3.5 | 3.5 | 4.0 |
PCE inflation | 4.3 | 2.7 | 2.3 | 2.0 |
December projection | 2.6 | 2.3 | 2.1 | 2.0 |
Core PCE inflation | 4.1 | 2.6 | 2.3 |
|
December projection | 2.7 | 2.3 | 2.1 |
|
Federal funds rate | 1.9 | 2.8 | 2.8 | 2.4 |
December projection | 0.9 | 1.6 | 2.1 | 2.5 |
Source: FOMC (Federal Open Market Committee) |
This table shows a comparison of 2022 to future expected growth in key indicators for the economy and the Federal Reserve. The general trend is that the labor market remains resilient and inflation is likely to come down with tighter monetary policy.
The S&P 500 has performed well on average over the past five rate-hiking cycles, averaging 6% six months after the first hike, 5% after 12 months and 12% from the first to the last rate hike.
Source: FactSet. Past performance does not guarantee future results. Market indexes are unmanaged and cannot be invested into directly.
1 Source: Ned Davis Research.
Mona Mahajan,
Investment Strategist
Source: FactSet
Mona Mahajan is responsible for developing and communicating the firm's macro-economic and financial market views. Her background includes equity and fixed income analysis, global investment strategy and portfolio management.
She regularly appears on CNBC, Bloomberg TV, The Wall Street Journal and Barron's.
Mona has an MBA from Harvard Business School and bachelor's degrees in finance and computer science from the Wharton School and the School of Engineering at the University of Pennsylvania.
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