CIBC Research discusses its reaction to today's FOMC November policy statement.
"The FOMC hiked interest rates by a further 75bps as expected, taking the fed funds rate range to 3.75-4.00%. Policymakers continued to state that further increases were appropriate, but added that those are to attain a stance that's sufficiently restrictive. In determining the future pace of hikes, policymakers will take into account the lags with which previous hikes are impacting activity. Those two remarks taken together will give officials a platform to stop hiking rates while inflation is still high, and as a result, yields have fallen. However, today's statement is still consistent with the median dot plot projections released back in September which showed rates reaching 4.25-4.50% by year end (i.e. a further 50bp hike in December), and between 4.50-4.75% next year," CIBC notes.
"Our own forecast doesn’t include that final 25bp hike in 2023, as we expect to see evidence that GDP and employment growth is slowing more than the Fed previously anticipated by then," CIBC adds.