Close this search box.

Fed Set to Ramp Up Rate Hikes To Fight Inflation


As expected, the Federal Reserve Board on Wednesday raised the target range of the

federal funds rate—a key short-term interest rate—by 25 basis points from the current

0-25 bp to 25-50 bp. The move was widely anticipated as a reaction to the historically

high levels of inflation seen in recent months. For example, the consumer price index for

February 2022 rose 7.9 percent from a year earlier—the biggest increase since January



Looking beyond the immediate news of the day, we see that the Fed expects to

continue raising the fed funds rate during 2022 and into 2023 based on its forecast for

inflation and other factors.


As seen in the chart, the Fed’s so-called “dot plot”—in which each Fed official plots one

dot on a grid to show where they think rates are headed—suggests the Fed will raise

rates six more times this year and at least three times next year. That would mean at

least 10 rate hikes in total (counting Wednesday’s increase), bringing the fed funds rate

up to around 2.75 bp by the start of 2024.



As borrowing costs rise over time, consumers typically spend less—easing the pressure

on prices. Indeed, the market is now pricing the Fed to cut rates once during

2024—suggesting the market believes 10 hikes may be too much for the economy to

handle over the next 18 months.


Of course, the Fed’s outlook for the economy and interest rates can and does evolve

as new data emerges. Consider that back in December 2021, Fed officials were

expecting just three rate hikes in 2022 and about six more over the next two years.

As always, we will closely monitor the Fed’s statements and actions regarding inflation

and interest rates—with a particular eye toward how those two factors are impacting

consumer confidence and consumer spending—and we will adjust the portfolios as

necessary to address economic and market conditions.


For clients who may be nervous about the short term health of the economy, a strategy

designed to mitigate drawdown risk, while continuing to grow assets may be a fitting

solution. Consider Risk Assist, designed with the goal of protecting wealth, reducing

investor anxiety and combating poor investment decision-making.



1 Bureau of Labor Statistics 3/10/22.

This commentary is written by Horizon Investments’ asset management team. For additional commentary and media interviews, contact Chief Investment Officer Scott Ladner at 704-919-3602 or

Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security. This report does not attempt to examine all the facts and circumstances that may be relevant to any company, industry or security mentioned herein. We are not soliciting any action based on this document. It is for the general information of clients of Horizon Investments, LLC (“Horizon”). This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any analysis, advice or recommendation in this document, clients should consider whether the security in question is suitable for their particular circumstances and, if necessary, seek professional advice. Investors may realize losses on any investments. Index information is intended to be indicative of broad market conditions. The performance of an unmanaged index is not indicative of the performance of any particular investment. It is not possible to invest directly in an index.

Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed herein are our opinions as of the date of this document. These opinions may not be reflected in all of our strategies. We do not intend to and will not endeavor to update the information discussed in this document. No part of this document may be (i) copied, photocopied, or duplicated in any form by any means or (ii) redistributed without Horizon’s prior written consent.

Other disclosure information is available at

Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC ©2022 Horizon Investments LLC

You are now leaving this website to go to