Fed Aims Hard at Soft Landing
Optimism about a soft landing accompanied the Fed’s May 2022 rate hike, fueling a market rally, as policy entered a second stage—likely with less volatility—of catching up with expectations.
PGIM Fixed Income has argued that developed market fundamentals have warranted a “low-for-long” interest-rate environment. This recognition has driven our accurate long-term U.S. interest rate forecast in several instances over multiple market cycles.
Optimism about a soft landing accompanied the Fed’s May 2022 rate hike, fueling a market rally, as policy entered a second stage—likely with less volatility—of catching up with expectations.
The ECB's April meeting saw no policy shift, likely giving the central bank time to evaluate both the steps taken to date and the progression of data before proceeding in the months ahead.
The Federal Reserve’s March 16th meeting announcement surprised on the hawkish side, with the updated Fed funds rate projections signaling that it's “all in” on the fight against inflation.
Amid the highly uncertain range of macro outcomes, we distinguish the economic and market developments that we were previously confident about from those that now appear highly uncertain.
The ECB left its policy stance unchanged at its first meeting of 2022, however there was a notable hawkish pivot, which suggests the ECB will become more reactive and "data dependent."