Marble facade of the Federal Reserve Building, Washington DC..

Yesterday marked a year since the Fed’s tightening cycle began, and they pressed ahead. The central bank chose to raise its policy rate by another 25 basis points—bringing the target range to 4.75%-5.00% (the highest since 2007).

They also released the latest update to their “dot plot,” a chart that summarizes FOMC members’ outlooks for the federal funds rate. The chart showed that the median member expects policy rates to finish this year around 5.1%, and then decline to 4.1% by the end of 2024. The read: Prepare for one more hike this year, and cuts to come in the year thereafter.

In simpler terms, this means that interest rates (which inform the cost of getting a loan to buy a house, fund a business, etc.) will stay elevated for the foreseeable future. Alongside the stress in the banking system, it also means that lending standards could stay tight—meaning, getting a loan in the first place, regardless of how much it costs, could be more challenging.

We would be remiss not to touch on comments from Secretary Treasury Janet Yellen that hit the tape at the same time as Fed Chair Powell’s press conference. In an effort to address speculation that arose in the wake of authorities announcing a backstop for all depositors at SVB and Signature Bank, Yellen said that the Treasury is not considering a broad increase in deposit insurance at this time. We’re grateful for the update, but note that it’s likely to keep markets on edge when it comes to uncertainty around the potential fallout from further stress on regional banks.

The bottom line: Today’s move signals that the Fed has confidence that the economy is still strong enough to handle higher rates, and that the overall banking system is sound. Powell made sure to emphasize that his crew is well aware of the prevailing risks, too, and that they warrant monitoring.

All in all, we think the latest banking shock, coupled with higher interest rates, could accelerate the onset of a U.S. recession… but also a sustainable cooldown in inflation.

The Fed signaled it's not quite hiking—but it depends on the data

The Fed signaled it's not quite hiking—but it depends on the data

Sources: Federal Reserve, Bloomberg Finance L.P. Data as of March 22, 2023.


This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at for assistance. Please read all Important Information.

GENERAL RISKS & CONSIDERATIONSAny views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.

NON-RELIANCECertain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

Legal Entity and Regulatory Information.

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.

J.P. Morgan may hold a position for itself or our other clients which may not be consistent with the information, opinions, estimates, investment strategies or views expressed in this document.  JPMorgan Chase & Co. or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer.