Is a Fed pivot in the cards (again) for sommer 2023?

admin
March 13, 2023
9:08 am

The term “Fed pivot” refers to a change in the monetary policy stance of the U.S. Federal Reserve (the Fed) that is seen as a significant shift from its previous stance. A Fed pivot can occur when the Fed alters its policy stance in response to changing economic conditions or to unexpected developments in financial markets.

A Fed pivot can take many forms, but it often involves a shift in the Fed’s stance on interest rates or on its balance sheet policy. For example, a Fed pivot may involve a change in the Fed’s guidance on future interest rate hikes or cuts, or a change in its quantitative easing program, which involves buying or selling government bonds to influence interest rates and the overall economy.

In recent years, there have been several instances of Fed pivots, most notably in 2019 when the Fed shifted from a policy of gradually raising interest rates to a policy of cutting interest rates in response to slowing economic growth and trade tensions. The Fed also pivoted in 2020 in response to the COVID-19 pandemic, cutting interest rates to near-zero and implementing a range of other measures to support the economy and financial markets.

Overall, the term “Fed pivot” is used to describe a significant shift in the Fed’s monetary policy stance that is seen as having important implications for the economy and financial markets.

So far the market expectations have been pushing out a Fed’s pivot to September 2023. However, after the fallout of Silicon Valley Bank (SVB), the market has abruptly changed its opinion and it’s anticipating a Fed pivot in July 2023. Let’s have a look at how the market expectations has been changing since October 2022 in regards to a possible pivot.

Expectations in OCT 2022: Pivot was expected in MAY 2023