Predicting the
Pivot: Why 2%?

Drew T. Matus
JAN 18, 2023

We recommend

Relative Value & Tactical Asset Allocation - Q1 2023

Global Risks 2023: Recession, Inflation, and Central Banks

The December Summary of Economic Projections (SEP) suggested the Federal Open Market Committee (FOMC) would hike rates another 75 basis points (bps), with the peak fed funds target rate at 5.00%–5.25%. The rate would remain at that level through the end of 2023 before declining by 100 bps per year in both 2024 and 2025. These expectations are based on the Committee’s view that their policy tightening will only result in an increase in the unemployment rate of less than one percentage point (to 4.6%) even as inflation remains above target through 2025