Commenting on the minutes of the Federal Reserve's December policy meeting, TD Securities analysts noted that officials remained in broad agreement about the need to push the policy stance further into restrictive territory in the near term.

Expecting 25bp rate hikes in March and May

"The focal points for the Fed's policy rate outlook in 2023 will be the pace of inflation based on core PCE services excl. housing and the tightness in the labor market. As both remain out of whack with an inflation trend in line with the Fed's target, the FOMC has raised its desired terminal Fed funds rate. In addition, once achieved, the Committee has no intention to move away from it soon, despite increasing downside risks to the growth outlook."

"We look for another 50bp rate increase in February, and expect 25bp rate hikes in March and May. We project the Fed will therefore settle on a terminal Fed funds target rate range of 5.25%-5.50% by May."