Rate cuts potentially off the table for 2023

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Quick Take

  • The fed funds rate now implies that rate cuts are off the table for 2023 and are expected to remain higher for a longer time frame in the year.
  • As the year progresses, rate hikes are expected to continue, while rates are expected to hold steady in the second half of 2023.
  • A solid improvement in yesterday’s U.S. PMIs reinforced the need for further policy tightening, particularly with inflation slowing less than expected in the U.S.
  • The S&P composite PMI jumped out of contraction on an absolute basis, showing significant improvement.
Fed Funds Rate Probability: (Source: CME Fed Watch Tool)
S&P Global Composite: (Source: Macroscope)
S&P Global Composite: (Source: Macroscope)

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