The Federal Reserve is almost sure to raise rates in March and seems determined to start its balance sheet contraction relatively soon. Economists at Nordea still expect four Fed hikes for this year, but the chance of even faster rate increases should not be overlooked.

March hike and more ahead

“We see four Fed hikes this year, but would not rule out a faster pace especially towards the end of the year.”

“We expect a decision on the balance sheet contraction during the summer.”

“We see more upside potential for US yields and more downside for the EUR/USD.”