Economists at Danske Bank are changing their Fed call based on FOMC Chairman Jerome Powell’s comments this week, which were definitely strong hawkish signals. They expect QE bond buying to end in April with an increase in the tapering pace to USD25 B per month.
“We now believe the Fed will increase the tapering pace to USD25 B per month starting from January, implying an end to QE bond buying in April.”
“We now expect the Fed to hike three times 2022 (June, September and December). If we are right about the increase in the tapering pace, the door is open for a rate hike at the May meeting. We still expect four rate hikes in 2023.”
“If the Fed increases the tapering pace to USD30 B per month, the Fed may raise the Fed funds target range already in March.”
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