Quarterly Economic Report, Q1 2023
Key takeaways
01
The Federal Reserve continues to tighten monetary policy.
In 2022, the fed funds rate was increased by 425 bps in response to high inflation data.
02
The labor market has sustained economic growth and has remained solid.
The unemployment rate is at a 50-year low, although the pace of job growth may be moderating.
03
Volatility was a consistent theme for the markets in 2022.
Persistent inflation, rising interest rates and geopolitical turmoil all weighed on investor sentiment.
Gross Domestic Product (GDP)
Q4 GDP read 2.9% QoQ, down slightly from 3.2% in Q3 due to rising interest rates and elevated inflation.
Inflation: Starting to Slow
December 2022 CPI YoY reached 6.5%, while Core PCE rose 4.4% YoY. The Fed expects inflation to decline during 2023.
"We would not consider rate cuts until confident inflation is moving toward 2%."
— Powell, December 14, 2022 FOMC Meeting
Global Central Bank Expectations
Recession predictions, slower growth and persistent inflation push central banks to remain hawkish in their monetary policy.
Short-end Interest Rates
The Fed slowed the pace of rate hikes as they allow the impact of 400 bps of higher yields to flow through the economy.
Written and researched by SVB experts
