Jerome Powell's 'Front-Loading' Interest Rate Expectation

Expert economists predict that the Fed will raise interest rates twice by 50 basis points each time, followed by lesser increases. It was noted that the US Federal Reserve Chairman Jerome Powell is expected to make two front-loaded interest rate hikes at the meeting, followed by a slowdown in the rate of increase in interest rates. At the Fed's May 3-4 meeting and at its June meeting, the Fed foresees a 50 basis point increase in interest rates. An increase in this amount will be recorded for the first time since 2000. Economists, who are experts in their fields, expect the increases to continue as 25 basis points in the second half of the year. It is stated that as of May, the bank will begin to reduce its balance sheet, which has reached 9 trillion dollars. 48 economists surveyed predict that the Fed will increase interest rates to the range of 2.25-2.5% by December. In the last projections of the Fed in March, it was predicted that the interest rate would be 1.9 percent at the end of this year and 2.8 percent next year. There are also more aggressive expectations than economists' forecasts. Nomura Holdings expects 75 basis point increase from the Fed in June and July. One of the Fed's most hawkish figures, St. Louis Fed President James Bullard emphasized that the interest rate range could be 3 - 3.25 percent at the end of the year. In his speech on April 21, Fed Chairman Powell stated that a 50 basis point increase in May would be on the table. Regional Fed Chairs make similar statements.

Recession prospect

Economists participating in the survey state that there is a recession risk, with one-third of respondents seeing the possibility of a recession in the next 2 years. Wall Street economists have been expressing their concerns about this issue lately. While Goldman Sachs stated that the probability of shrinkage in the US economy in the next 2 years is 35 percent, Deutsche Bank announced that it expects a great recession and a few percentage points increase in the unemployment rate.