Chamath @ 00:40:19Wrong
economy
In calendar year 2022, the U.S. Federal Reserve will raise the federal funds rate approximately five times, in increments of about 25 basis points each.
we effectively now started to price in about five rate hikes this year. So probably 5 25 point rate hikes effectively that's what that's what the that's what the yield curve tells us.View on YouTube
Explanation
What was predicted
Chamath said that for calendar year 2022, markets had “effectively now started to price in about five rate hikes this year… probably 5 25‑point rate hikes,” i.e., roughly five 25 bps increases in the federal funds rate.
What actually happened in 2022
In 2022, the Federal Reserve raised the federal funds target range seven times, and most hikes were larger than 25 bps:
- March 16, 2022: +25 bps (0.25%) hike, to 0.25–0.50%.
- May 4, 2022: +50 bps hike, to 0.75–1.00%.
- June 15, 2022: +75 bps hike, to 1.50–1.75%.
- July 27, 2022: +75 bps hike, to 2.25–2.50%.
- September 21, 2022: +75 bps hike, to 3.00–3.25%.
- November 2, 2022: +75 bps hike, to 3.75–4.00%.
- December 14, 2022: +50 bps hike, to 4.25–4.50%.
Across 2022, there were 7 hikes, and the total increase in the target range was 425 bps, not five 25 bps hikes (~125 bps).
Conclusion
Because the Fed raised rates more often (7 vs. ~5 times) and in larger increments (multiple 50–75 bps moves, not mostly 25 bps), the prediction that 2022 would see “probably 5 25‑point rate hikes” is incorrect.