US Federal Reserve Expectations – H2 2023

• Senior Loan Officer Opinion Survey reported tighter bank lending standards and weaker demand.
• Robust JOLTS data and declining response rates overstate labor market strength.
• Despite robust NFP data, wage growth and unemployment pointed to a slack.
• Inflation moving in the right direction but still way off Fed’s 2% target.
• One-off income growth in January supported Q1 consumption expenditure.
• GDP growth expected to slow as past rate hikes work through the economy.
• Future rate hikes cannot be ruled out if incoming data turns out to be robust.
• Policy rates to remain higher for the remainder of 2023; Rate cuts seen in 2024.

US_Fed_Monetary_Policy_Expectation_H2-2023