Falling peaks in rates — the Fed has tended to overshoot

Sources: Bloomberg and Wells Fargo Investment Institute. Monthly data from March 1, 1971 to June 30, 2022. For illustrative purposes only. Fed = Federal Reserve.

Key Takeaways

  • We believe that the number of rate hikes in 2022 and 2023 remains flexible and dependent on how the economy and inflation levels continue to evolve.
  • Over the past four decades, policy interest rates have topped out at progressively lower levels during monetary policy tightening, eventually pushing the economy into a recession.