Uncertainty surrounds the future plans of the Federal Reserve for interest rate increases -
Uncertainty surrounds the future plans of the Federal Reserve for interest rate increases -
The US Federal Reserve has raised the key interest rate seven times in the course of 2022, which causes many to ask when the central bank will stop or change its course. The FED has explained that it aims to reduce inflation to the target of 2 %, and the increase in the Federal Funds Rate should get closer to this goal. Zoltan Pozsar, a US macro economist and observer of the Fed, predicts that the central bank will start again with the quantitative loosening (QE) by summer. Bill Baruch, a senior employee at Blue Line Futures, a brokerage company for deadlines and raw materials, assumes that the Fed will stop the interest rate increases by February.
experts consider the opportunity to pause interest rate increases and to resume quantitative loosening
Inflation in the USA has increased significantly last year, but has slowed down since then. After seven interest rate increases by the central bank, investors and analysts expect a change of course for the Fed this year. In an interview with Kitco News, Bill Baruch, President of Blue Line Futures, told Kitco's moderator and producer David Lin that the US-Nice Bank will probably stop in February. Baruch referred to the decline in inflation and named production data as a factor in its prediction.
"I think there is a good chance that we will not see the Fed increase in February at all," said Baruch to Lin. "We could see something from them that would surprise the markets in the first week of February." However, Baruch emphasized that the markets will be "volatile", but will also experience a strong rally. Baruch explained that the interest rate increases were "aggressive", and he found that "there was signs in 2021 that the economy was ready to slow down". Baruch added:
But since the Fed raised these interest rates to the stop, that was the reason for this onset of market.
repo-guru predicts that the US Federal Reserve will resume the quantitative loosening in summer under the “guise coat” of interest-bearing controls
There is a certain uncertainty among analysts as to whether the Federal Reserve will raise the Federal Funds Rate or change its procedure. Bill English, financial professor at the Yale School of Management, to Bankrate.com that it is difficult to make it difficult to Federal Reserve for interest rate increases in 2023.
"It is not difficult to imagine scenarios in which they consider interest in the next year," said English. "It is also possible that you will ultimately reduce interest rates when the economy really slows down and inflation is strongly back. It is difficult to be safe for your prospects. The best thing you can do is to weigh up the risks."
The US macroeconomist and Fed observer Zoltan Pozsar assume that the Fed will resume quantitative loosening (QE) until summer. According to Pozsar, the Fed will not turn for a while and treasuries will be under pressure. In a recent zerohedge.com "QE summer" of the Fed will take place under the "guise coat" of zinskurve controls.
Pozsar believes that this will be done until “at the end of 2023 to control where US treasuries are traded towards OIS”. Care for Pozsar's prediction, Tyler Durden from Zerohedge.com explains that it will be like a "chess-like" situation and that the upcoming implementation of QE will take place as part of a dysfunction on the treasury market.
What do you think about the steps of the Fed in 2023? Do you expect further interest rate increases or do you expect a swivel of the Fed? Let us know your opinion on this topic in the comment area below.
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