A Cutting History: 2023 in Context

Tani Fukui
OCT 11, 2022



We continue to expect Fed Funds rate cuts in 2023, despite markets lowering their rate cuts expectations.


We believe it relatively unlikely that the Fed will be able to maintain high rates for a long time. Moreover, the higher they hike over the next few quarters, the more likely they will have to cut in 2023.

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Historically, the average length the Fed has held monetary policy at a high and constant rate has been approximately half a year, with some hiking episodes reversed nearly immediately.