Outlook 2023: What's Next for Interest Rates?
Fed officials recently have said that short-term rates will need to climb to over 5 percent to bring inflation under control. But bond traders say short-term rates will top out at 4.5 percent in 2023 and then head lower.
The bond market is more dovish than the Fed. And perhaps with good reason. The November Consumer Price Index report came in below expectations, and there are more and more signs that inflation has started to trend lower, which may suggest the Fed’s work is coming to an end.
So why is the Fed talking so tough? As many of you may recall, Fed Chair Jerome Powell said inflation was “transitory” throughout much of 2021. The Fed Chair doesn’t want to mischaracterize inflation again.
I work with other financial professionals who listen to comments from Fed officials and compare them to what the bond market is saying. So if you happen to hear commentary about the Fed that’s unsettling in any way, please let me know as soon as possible so we can review what’s going on.
Mary may be reached at (520) 495-2800 or Mary@schulzfinancialgroup.com.
Schedule an appointment with me by clicking here: https://go.oncehub.com/MarySchulz
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Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
This material was prepared by MarketingPro, Inc. for use by Mary Schulz