The Fed: high rates for much longer
- The expected pause in rate hikes had a distinctive hawkish flavour, as the dots point to another rate increase this year and, more importantly, a much flatter path of loosening in 2024, with only a 50bps reduction. The appropriate policy rate is expected to remain some 40bps above the long-term measure by 2026.
- The path for a soft landing has opened wide, according to the Fed, which has revised massively up the growth projections and expect the unprecedented degree of tightening to raise the unemployment rate only marginally. There- fore, the economy needs and can withstand higher rates for longer to tame inflation.
- At the same time, the hawkish bias helps the FOMC to keep all options open given the still large uncertainty on the economy and, by disappointing expectations of a quick loosening, should prevent an unwelcome loosening in financial conditions.
Download the full publication below
This document is based on information and opinions which Generali Insurance Asset Management S.p.A. Società di gestione del risparmio has obtained from sources within and outside of the Generali Group. While such information is believed to be reliable for the purposes used herein, no representation or warranty, expressed or implied, is made that such information or opinions are accurate or complete. The information, opinions estimates and forecasts expressed in this document are as of the date of this publication and represent only the judgment of Generali Insurance Asset Management S.p.A. Società di gestione del risparmio and may be subject to any change without notification. It shall not be considered as an explicit or implicit recommendation of investment strategy or as investment advice. Before subscribing an offer of investment services, each potential client shall be given every document provided by the regulations in force from time to time, documents to be carefully read by the client before making any investment choice. Generali Insurance Asset Management S.p.A. Società di gestione del risparmio may have taken or, and may in the future take, investment decisions for the portfolios it manages which are contrary to the views expressed herein provided. Generali Insurance Asset Management S.p. A. Società di gestione del risparmio relieves itself from any responsibility concerning mistakes or omissions and shall not be considered responsible in case of possible damages or losses related to the improper use of the information herein provided. It is recommended to look over the regulation, available on our website www.generali-investments.com. Generali Investments is part of the Generali Group which was established in 1831 in Trieste as Assicurazioni Generali Austro Italiche. Generali Investments is a commercial brand of Generali Investments Partners S.p.A. Società di gestione del risparmio, Generali Insurance Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. and Generali Investments Holding S.p.A..