“Fed Has No Exit Strategy for Rate Cycle,” Economist Says

The Fed Fund Futures now has a 53% probability of a 50 basis point rate hike in March by the Federal Reserve. Just a month ago, the chance for a 50bps rate hike was only 1% and the peak rates were expected at 5.25%. The market is now expecting a 35% chance for the rate to go to 6.00% this summer.

TS Lombard Chief U.S. Economist Steven Blitz noted that the Fed could not estimate its rate ceiling until unemployment goes up and the economy enters a recession. The chief noted that the central bank does not make it clear on the ceiling of interest rate increases.

“They have no idea where the top rate is, because they have no idea where inflation settles down without a recession,” Steven Blitz told CNBC’s “Squawk Box Europe”.

Meanwhile, Goldman Sachs raised its terminal rate target range forecast for the Fed Fund rate to 5.5-5.75% after Powell’s statement to the Congress, which is in line with the market consensus.