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An 88 Percent Chance the Fed Hikes by Three-Quarters of a Point Today, Then What?

The Fed will hike in just a few hours. What it says today will influence expectations for a year ahead. Here's a current snapshot.
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Target Rate Odds for Nov 2 2022 ahead of Nov 2 Decision

Target Rate Odds for Nov 2 2022 ahead of Nov 2 Decision

Target rate odds are from CME Fedwatch

December 14, 2022 Meeting 

Target Rate Probabilities for December 14, 2022 as of November 2, 2022

Target Rate Probabilities for December 14, 2022 as of November 2, 2022

February 1, 2023 Meeting 

Target Rate Probabilities for February 1,  2023 as of November 2, 2022

Target Rate Probabilities for February 1, 2023 as of November 2, 2022

March 22, 2023 Meeting 

Target Rate Probabilities for March 22, 2023 as of November 2, 2022

Target Rate Probabilities for March 22, 2023 as of November 2, 2022

June 14, 2023 Meeting 

Target Rate Probabilities for June 14, 2023 as of November 2, 2022

Target Rate Probabilities for June 14, 2023 as of November 2, 2022

September 20, 2023 Meeting 

Target Rate Probabilities for September 20, 2023 as of November 2, 2022

Target Rate Probabilities for September 20, 2023 as of November 2, 2022

December 13, 2023 Meeting 

Target Rate Probabilities for December 13, 2023 as of November 2, 2022

Target Rate Probabilities for December 13, 2023 as of November 2, 2022

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Terminal Rate 

There are two additional meetings that I did not show, in July and November of 2023.

The market expectation of a terminal rate is 5.00 percent in June or September of 2023. 

A cut back to the 4.50% to 4.75% is then expected by the end of 2023. 

The schedule of expected hikes may change substantially in a few hours depending on what Fed Chair Jerome says. 

Looking ahead, the moment the Fed pauses from the expected schedule following today's meeting is the moment expected increases in the rate of hikes reverses for good.

Right now, I highly doubt we get to 5.0%. In fact, I expect we will see our last hike no later than December 2022 at 4.25% to 4.50%.

A recession will then be obvious. 

This post originated at MishTalk.Com.

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