With:  

Olivia Frieser, Global Head of Markets 360 

Luigi Speranza, Chief Global Economist  

Shahid Ladha, Head of Strategy for G10 rates north America.

BNP Paribas | Global Markets (Recorded 12 January 2022)    

The Federal Reserve has shifted more hawkish in recent weeks – expressing concerns over high inflation and comfort over the level of employment. 

We expect the Fed to lift-off in March and deliver four 25bp rate hikes in each of the next two year. 

Quantitative tightening discussions are advancing. We look for the Fed to start shrinking its balance sheet in the second half of this year. 

Our 2y UST yield forecasts have been raised to 1.75% at the end of the year, reflecting a faster Fed normalization path. 

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