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Brewin Dolphin comments on yesterday’s Summary of Economic Projections

Federal Reserve Building

Paul Danis, head of assest allocation at wealth manager Brewin Dolphin, discusses the Fed quarterly Summary of Economic Projections announced yesterday

Paul Danis, Brewin Dolphin, says:

“The Fed released its quarterly Summary of Economic Projections [yesterday]. While the Fed continues to believe the recent increase in inflation will be transitory, the Fed brought forward the date which it expects to begin hiking rates. 13 of the 18 Fed board members and bank presidents now forecast at least one rate hike by the end of 2023, versus only seven in March. 11 of them believed two hikes would occur by the end of 2023. Seven of the 18 Fed officials thought that rate lift-off would begin in 2022, up from four in March.

“These projections were more hawkish than almost anyone expected. Predictably, Treasury yields rose, equities declined, and the dollar rose.

“Since the Fed announced the change to its framework last August, a key question for investors has been the extent to which the Fed would be willing to tolerate an inflation overshoot. We remain in unchartered territory and still don’t have an answer to that question.  But today’s report suggests that the Fed has become more anxious to signal that their hyper accommodative policy stance will not persist indefinitely.”

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