Bankinter| From the minutes of the Fed’s meeting of December 13th and 14th: There was no explicit mention of the possibility of an interest rate cut in 2023; rather they argue that they believe it is appropriate to keep interest rates at elevated levels for an extended period of time, although they retain the flexibility to react as appropriate to the data at any given time.
The Committee expresses concern about easing financial conditions (rising stock markets and easing bond yields) which they see as undermining market confidence in their commitment to bring inflation back to the 2% target and would eventually force them to keep rates in tight territory for longer. They describe a less adverse economic outlook in the near term than at their November meeting, following a stronger-than-expected second half of 2022, although economic growth will remain subdued until 2025.
Opinion of Bankinter’s analysis team:
Rather hawkish/harsh tone but not new, which does not produce significant variations in the T-Note IRR (+2.6bp to 3.709%) or the dollar (€/$ 1.0607).