Opening Statement from the January 2022 CCPM Forecaster

Opening Statement from the January 2022 CCPM Forecaster

Originally published on January 2, 2022 (pre-market release)

Interest Rates

As a reminder, a consideration of future tightening or rate hikes is significant for investors because higher rates tends to put downward pressure on earnings growth and equities valuations, while shifting more cash into fixed income. 

Fortunately, we do not believe short-term rates will be raised by much over the next two years. The Fed’s dot plot currently indicates 3 rate hikes (each 25 basis points) in 2022. This might come as a shock to those believed the Fed’s original forecast for only 1 rate hike by the end of 2023, as first communicated in September 2020 and repeated into the first half of 2021.

Ever since the Fed released that forecast, we insisted that short-term interest rates would need to be raised several times before the end of 2023. Although it’s...