Deutsche Bank raises expectations of peak Fed rates to 5.6%

Up from 5.1%

Deutsche Bank has raised its expectations for the US terminal interest rate, warning the bank’s “base case” predicts a recession over a soft landing.

Following inflation numbers released yesterday (14 February), DB predicted the Federal Reserve would raise rates to 5.6%, up from a previous forecast of 5.1%. This would likely occur through two more hikes than it had previously forecast, across 25 basis point hikes in the Federal Open Market Committee June and July meetings, the bank said. Yesterday (14 February), the Department for Labor Statistics revealed that inflation sat at 6.4% in January, above expectations of 6.2%. DB analysts wrote in a note: "Yesterday was the straw that broke the camel's back as the risks have been on ...