The week 14.03.-18.03.2022

Despite geopolitical uncertainties, the Fed signalled that it intends to continue raising interest rates to combat inflation, which hit a 40-year high last month. Price pressures are spreading beyond a few pandemic-affected categories (such as automobiles), and the recent surge in commodity prices has pushed back the long-awaited inflation peak and normalisation date.
The Fed also released the so-called “dot plot,” which shows where individual Fed officials expect interest rates to be in the future, in addition to the widely anticipated 0.25% rate hike. The majority now expects seven hikes this year, four in 2023, and none in 2024, owing to the large inflation revisions. The policy rate would then rise to 1.9 percent this year and 2.8 percent by the end of 2023. It would also be higher than the committee’s estimate of the long-run neutral rate, implying that when the Fed is done tightening, policy will be slightly restrictive to growth.
The S&P 500 closed strongly with 6.20%, compared to One-Signal Xpress with 3.13% and One-Signal Xpert with 1.38%.