🔶Barclays: Still expecting the Fed to raise interest rates by 50 basis points in February and 25 basis points in March

Barclays still expects the Fed to raise interest rates by 50 basis points at its February meeting and by 25 basis points in March. Economists believe a smaller rate hike in March will be a response to growing evidence of slowing economic activity and the labor market, as well as continued moderation in inflation data. That would bring the federal funds target range to 5%-5.25% after March, corresponding to the midpoint of the dot plot in the December Economic Forecast Report. However, the February FOMC decision still depends on the release of key data, such as December CPI due next week.

Economists said that looking beyond March, they expected the FOMC to pause on raising interest rates but did not rule out the possibility of continuing to raise rates gradually if the committee failed to see enough economic slowdown.