Expecting Rate Cuts in 2023 Is Premature: A Summary of the December FOMC Minutes
1 min read · · Korean original
The minutes from the December 2022 FOMC meeting were released last night. Here's a summary of the key points.
1. Fed officials unanimously said they are not considering rate cuts in 2023.
2. High rates will stay unless inflation clearly comes down to 2%
3. Slowing the pace of rate hikes doesn't mean the Fed is giving up on fighting inflation
On this topic, I think it's worth reading Oh Geon-young's essay.
The market has kept hoping, "Surely rates have gone up enough by now, so it's time for a rebound?" and the Fed has crushed that hope every single time.
Unlike the market, which first expected 1%, then 2%, then 3%.., rates have now passed 4%. And they look set to pass 5% soon.
Even if an economic downturn, a recession, begins, the Fed will find it hard to cut rates and loosen money the way it used to. Doing that would send the inflation it worked so hard to tame soaring again.
If rates peak after the second quarter, we might be able to hope for a rebound in asset markets, but 2023 looks like it will be a tough year in many ways.
