According to CME, the fed funds peak will be reached tomorrow. So… “25 done”…
figure 1: Effective federal funds (black), implied federal funds as of May 2nd at 5pm EST (red squares), March 8th (pink squares), February 15th (light green triangles). Source: Federal Reserve via FRED, CME Group Fed Watch and author’s calculations.
From mid-February to early March, higher-than-expected inflation pushed up the expected trajectory of the federal funds rate. After March 8, troubles at SVB and other banks pushed down the expected trajectory.
The current projected 5/3 peak is earlier and lower than the 9/20 expected by March 8 futures.Although this peak is below the modal response between 5.5%-6% FT-IGM survey mid-Marchthe timing (modal response of Q2) matches.
