US Federal Reserve to hike 50bps next week

BofA Global Research with the note:

Key Takeaways:

• We expect the Fed to hike by 50bp next week (almost a done deal), 50bp in Feb and 25bp in Mar for a terminal rate of 5-5.25%.
• Chair Powell will send a hawkish message as the resilient labor market means risks are skewed toward a higher terminal rate.
• The updated SEP and Powell’s press conference are likely to be seen as hawkish by the rates market.

“Slowing” down with a 50bp rate hike

We expect the Fed to raise its target range for the federal funds rate by 50bp in December to 4.25-4.5%. Fed communications over the last few weeks have clearly telegraphed this move. The more important question is where the Fed goes next. In our view, the economic outlook has not changed materially since the November meeting.