En kamp mod inflationen uanset omkostningerne. Sådan tolker Pimco beslutningen i den amerikanske centralbank om at hæve renten med 75 punkter og ved at indikere en fortsat skrap pengepolitik. Fed er parat til at bekæmpe inflationen med alle midler, selv om det fører til øget arbejdsløshed og recession, vurderer Pimco. Det er en af de mest dystre kommentarer indtil nu til rentestigningen.
Fed Battles Inflation Despite the Costs
The Federal Reserve ratchets up the pace of monetary tightening, raising questions about the U.S. growth outlook.
While the projections acknowledge a slower expected pace of growth in the year ahead, Fed Chair Jerome Powell at his press conference said the Fed still believes the U.S. economy can achieve a soft landing, and the Fed’s median forecasts point to this as well. However, looking ahead over the coming year or so, we believe today’s high inflation increases the risk that the Fed overtightens, and raises questions about whether the trend-like U.S. growth they are forecasting is achievable.
June meeting details: Getting serious
The 75-bp rate hike, economic projections, and Powell’s comments all indicate Fed officials are much more focused on fighting inflation than their previous guidance suggested. A 50-bp or 75-bp hike is likely at the next meeting in July, and the “dot plot” suggests we may see a total of two or more additional larger-than-25-bp hikes in the coming months before the central bank graduates down to the more conventional 25-bp-per-meeting pace toward year-end. Despite the sharp increase in guidance, only a few dots are meaningfully above the peak forecasts priced into markets.
Of note, the projections show Fed officials are now unanimous in thinking that the fed funds rate needs to rise above neutral (the Fed’s estimate of the neutral rate, or r*, is around 2.5%, as indicated by the median of their longer-run projections). While markets had already priced in rates moving above neutral, this suggests considerably more unanimity among Fed officials on the steeper path of rate hikes than what we heard after the May FOMC meeting.
As a result of the tighter monetary policy tightening path, Fed officials also downgraded their growth and unemployment forecasts. Unlike the most recent projection update in March, where higher rates did not correspond to a meaningful downgrading of the economic outlook, Fed officials signaled that they understand that a tighter monetary policy tightening path is not without costs.
A challenging and uncertain macro outlook
Longer term, we see risks that the Fed’s willingness to fight inflation at all costs does eventually come with a larger price for growth and employment. With inflation having shifted into slower-moving measures such as shelter prices, and the labor market tending to take several quarters to reflect slower growth, we see a risk that the Fed overtightens. As a result, we think there are downside risks to our forecast for the U.S. economy to slow to stall-speed.
