by Calculated Risk on 1/02/2022 11:57:00 AM
Earlier I posted some questions on my blog: Ten Economic Questions for 2022. Some of these questions concern real estate (inventory, house prices, housing credit, housing starts, new home sales), and I posted those in the newsletter (others like GDP and employment will be on my blog).
I’m adding some thoughts, and maybe some predictions for each question.
6) Monetary Policy: In response to the pandemic, the FOMC cut rates to zero, and initiated an asset purchase program in March 2020. The FOMC is currently on pace to stop the asset purchase program in March 2022. A majority of FOMC participants expect three rate hikes in 2022. Will the Fed raise rates in 2022? If so, how many times?
First, on asset purchases from the December 2021 FOMC statement:
The current plan is to end asset purchases in March 2022.
One Rate Hike
Two Rate Hikes
Three Rate Hikes
Four Rate Hikes
Clearly the main view of the FOMC is three rate hikes in 2022.
o Question #5 for 2022: Will the core inflation rate increase or decrease by December 2022?
o Question #6 for 2022: Will the Fed raise rates in 2022? If so, how many times?
o Question #7 for 2022: How about housing starts and new home sales in 2022?
o Question #8 for 2022: Housing Credit: Will we see easier mortgage lending in 2022?
o Question #9 for 2022: What will happen with house prices in 2022?
o Question #10 for 2022: Will inventory increase as the pandemic subsides, or will inventory decrease further in 2022?