Wells Fargo Says FOMC Will Not Cut at First Sign of Economic Weakness

Wells Fargo Says FOMC Will Not Cut at First Sign of Economic Weakness.

Wells Fargo Economist Jay Bryson comments "We now look for the FOMC to hike its target range for the fed funds rate by 75 bps at the November 2 meeting and by 50 bps at the policy meeting on December 14. We think the Committee will tighten further early next year with 25 bps rate hikes at both the February 1 and the March 22 meetings. If realized, the target range for the fed funds rate would top out at 4.75%-5.00% in March 2023. In our view, the FOMC will not cut rates at the first sign of economic weakness to ensure that inflation is moving convincingly back toward target. But with the economy in recession, the unemployment rate rising and inflation receding considerably, we expect the FOMC will reverse course in the fourth quarter of next year. Specifically, we look for the Committee to cut rates by 50 bps in Q4-2023 with another 175 bps of easing by Q3-2024."

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