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The Fed Expects 6 Rate Hikes By End of 2023 – I Don’t and You Shouldn’t Either

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22 comments on The Fed Expects 6 Rate Hikes By End of 2023 – I Don’t and You Shouldn’t Either

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Look Ahead Dot Plot December 2021

Along with today’s wimpy tapering announcement comes more Projection Material from the Fed including a Dot Plot of expected rate hikes.

Fed participants expect 3 rate hikes in 2022, 3 more in 2023, and still more in 2024.

Fade This Consensus!

I confidently make the same statement that I make after all these absurd projections.

Clown Acts

I am curious as to which Fed clown predicted a 4.75% Fed Funds rate for 2020. Another predicted 4%.

In today’s clown act, five FOMC participants actually believe that in 2024 the Fed will hike all the way to 2.75% to 3.25%. 

Such predictions are amazing in light of what they would do to interest on national debt.

I am unconvinced the Fed gets in any hikes in 2022 and certainly not 6 by the end of 2023.

Amazing Underlying Assumptions

These ridiculous predictions assume there will not be another recession in “the longer run”. 

I am confident there will be another recession by 2024. 

Admittedly, I am typically a early in my recession calls. But these clowns never see them and Ben Bernanke denied a major one we were already in. 

The only faith anyone should have in these Dot Plots is they will be amazingly wrong.

Fed Finally Satisfied at Reaching Inflation Goals, Doubles Rate of Tapering

For further comments on today’s FOMC announcement, please see Fed Finally Satisfied at Reaching Inflation Goals, Doubles Rate of Tapering

The most interesting if not shocking news of the week is A Former Fed Governor Blasts Jerome Powell, Says Inflation is the Fed’s Choice

Too Late For a Wakeup Call

Achieving a soft economic landing at this late stage is difficult, says Warsh in an obvious understatement.

Unfortunately, it’s far too late for a wakeup call, The bubbles have already been blown. 

When bubbles burst guess what’s next: Recession!

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Mish

Mike Shedlock

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22 Comments
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kiers
kiers
4 years ago
It’s a numbers shell game; QE had the 10yr at 2% for long periods of time with inflation running ~1.8%; a barely positive yield; 
Now with all the shock and awe “hype” machine post Trump bombast and post covid, we’ll have 10yr at 2.5% tops with 2.2% inflation.
WHAT CHANGED?   QE was always at 2% yield anyways.  So many pixels so much ink in the big publications so much noise. 
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FooFooFed
FooFooFed
4 years ago
Question: if we get a few wimpy hikes isn’t the money creation side still much larger and what happens to the rate of inflation. Guesses where we will be in 6 months???
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RonJ
RonJ
4 years ago
“The Fed blew another bubble and still doesn’t see it.”
It is difficult to see something when someone’s job depends on not seeing it. The FED telegraphs it’s intention to reduce QE or raise rates well in advance, so as to not spook the stock market. In the 2014 August swoon, Bullard pretended that QE shouldn’t end, in order to goose the stock market to a new high, as QE continued to wind down. When Japan picked up the QE baton, Bullard then proclaimed QE should end and that his August comment was misunderstood. Bullard should try his hand at selling bridges in Brooklyn.
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Gordofeo
Gordofeo
4 years ago
Mish, do you think the Fed members with 2.75-3.25%+ Fed funds is genuine or just to assuage inflation concerns?
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whirlaway
whirlaway
4 years ago
The last time, the markets started falling apart when the rates reached 2%.   And the time before that, it was about 5.25%.    So we can expect that this time, if the rates reach even as little as 0.75% or so, the asset markets would once again collapse.
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Eddie_T
Eddie_T
4 years ago
Reply to  whirlaway
So…no doubt markets would sell off on a big interest rate raise….but….I think once the correction was over, it would be bullish for the dollar and US equities, because there are so few decent returns anywhere in the world….foreign investors who need to hedge against a rising USD would come in to support US stocks and bonds. 
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KidHorn
KidHorn
4 years ago
The only way the funds rate hits 5% is if our government has defaulted or the FED has $20t+ of T-bills and retires it.
I put the over/under on two 0.25 hikes.
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StukiMoi
StukiMoi
4 years ago
Idiot A “expects” 20 rate hikes.
Idiot B expects self flying BRs and AIs.
Idiot C expects “blambom neutrailty…..”
While poor idiots D, E, F……… are pathetically dumb and indoctrinated enough, to “expect” anything other than rank, clueless, trivial retardation; from either of them…..
People who can, do. Guaranteeing that the only ones left to “expect”, “promise”, “predict”, “commit” blah, blah; are the ones too incompetent and unintelligent to do and contribute anything of value at all.
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anoop
anoop
4 years ago
where’s the bubble?  i don’t see it.  we is going higher, much higher.
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Tengen
Tengen
4 years ago
These hike predictions are indeed outlandish, at 3% it would cost $900B/year just to service our existing debt. That’s well above even the bloated Pentagon budget!
It’s going to be “extend and pretend” as far as the eye can see.
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To Da Moon
To Da Moon
4 years ago
Treasury rates rising only impacts the interest expense on new debt, not old debt.  So, yes new debt interest costs goes up but it does nothing for the trillions of dollars of treasuries already out there.  But, as more as more treasuries are “recycled”, total interest expense would rise significantly.  How would our genius politicians pay for that?
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KidHorn
KidHorn
4 years ago
Reply to  To Da Moon
They’ll have to issue more and more new debt every year and the average maturity of current debt is roughly 5 years, so it won’t take long to be taking on water.
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Christoball
Christoball
4 years ago
Could this be true??
Most American homeowners are ‘house poor’ — and 40% of them have taken second jobs to afford a mortgage, survey says:
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amigator
amigator
4 years ago
Reply to  Christoball
Probably but these are the same that would have a second job to afford renting also.
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az_dirt
az_dirt
4 years ago
Why the jump in interest rate sensitive investments like preferred stocks and utilities?   Did they price in interest rate hikes and the FED’s statement was dovish enough so everyone agrees with Mish that there will be no hikes in 2022?
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Jackula
Jackula
4 years ago
I do not know but seeing the continuing deflationary massive investment in automation coupled with the easy access of many players to free credit or even being paid to borrow in real terms we will continue to blow the current asset bubbles even bigger.
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amigator
amigator
4 years ago
Reply to  Jackula
There is really no choice if they want to maintain their “power” and/or “wealth”.
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GaryL
GaryL
4 years ago
I’ve been a deflationist for 20 years, and maybe a capitulation means it will finally happen in earnest. But there are many signs that this inflation is real. Commodities had a huge rally this year, and yes they have pulled back lulling some people back to sleep, but few if any are even close to the lows of a year ago. Interest rates on the 10/30 bottomed a year+ ago too, and while they have not increased that much in nominal terms, they are more than triple (almost 400% higher for the 10-year!), consistent with a cycle that is kicking off. And the Biden administration has become unhinged from any semblance of fiscal and monetary sanity. This time I think printing will have results, and if they do, the bond market will finally cut loose from its moors. That will mean the Fed will have to raise rates, and often, so I agree that the Fed’s guidance is way off, but to the understated. The market, not the Fed, will determine it, that is 100% certainty, so we shall see. 
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davebarnes2
davebarnes2
4 years ago
Whatever.
Historically low.
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KidHorn
KidHorn
4 years ago
Reply to  davebarnes2
If you’re financing a home or car, not a big deal, but when you pay interest on $30t, it’s a big deal.
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1-shot
1-shot
4 years ago
Wait until closer to midterm elections and see what they do or don’t do
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Tony Bennett
Tony Bennett
4 years ago
Progressives on the run
Republicans more than comfortable dragging their feet allowing Democrats to “own this” in prep for mid terms
Inflation not letting up
China slowinnnggggg
Next stop?  2022 Recession
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