Factbox: What global banks are planning for Fed rate hikes in 2022

The U.S. Federal Reserve Building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis//File Photo

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Feb 18 (Reuters) – Major investment banks have forecast a strong round of interest rate hikes for 2022 after warmer-than-expected inflation data intensified pressure on the Federal Reserve to adopt a firmer stance against soaring prices.

Data from last week showed US consumer prices rose at their fastest pace since the early 1980s, fueling market speculation for a steep 50 basis point rise since the Fed meeting. March 15 and 16. Read more

The current effective target for federal funds is 0-0.25%.

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As the Fed prepares to hike rates in the pandemic era, here are estimates from the world’s leading investment banks on how big and how fast rates will rise:

* JP Morgan is raising its Fed call for seven 25 basis point rate hikes from five previously, for a total of 175 basis points of tightening this year.

* Morgan Stanley now expects the Fed to deliver six 25 basis point hikes this year. He had previously forecast a 125 basis point tightening via four 25 basis point hikes plus an equivalent 25 basis point outflow of federal funds from the Fed’s balance sheet.

* UBS now expects 150 basis point tightening this year via six consecutive quarter-point moves from March to November. He had previously forecast hikes of 25 basis points in March and June, then “a potential shift to an upward pace at each meeting.”

* BNP Paribas expects six hikes of 25 basis points this year from March, resulting in a cumulative tightening of 150 basis points.

* Citi now expects a 150 basis point tightening this year, starting with a 50 basis point move in March, followed by four quarter-point increases in May, June, September and December.

* Credit Suisse now expects the Fed to hike 175 basis points this year, starting with a 50 basis point hike at the next March meeting.

* Societe Generale now expects five rate hikes of 25 basis points this year, starting in March.

* Goldman Sachs said it was raising its forecast to include seven consecutive 25 basis point rate hikes at each of the remaining Federal Open Market Committee (FOMC) meetings in 2022 from a previous expectation of five hikes. Read more

* BofA Global Research expects the Fed to hike rates by 25 basis points at each of the remaining seven meetings this year, unchanged from its previous outlook. However, he said there is a risk of a 50 basis point hike at the March meeting.

* HSBC expects the Fed to hike 50 basis points in March and four more quarter-point rate hikes in 2022.

* Deutsche Bank expects the Fed to call a 50 basis point hike in March and five more 25 basis point hikes in 2022, with a hike at all but the November meeting.

* Barclays now expects the Fed to raise rates by 25 basis points five times this year, up from three hikes expected earlier.

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Reporting by Aniruddha Ghosh in Bengaluru and Jamie McGeever; Editing by Devika Syamnath, Alistair Bell and William Mallard

Our standards: The Thomson Reuters Trust Principles.

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