PGIM's forecast is quite aggressive: three rate hikes followed by three rate cuts, with the 2027 interest rate anchored at 3.375%. The Federal Reserve's credibility battle is playing out well.

CryptoWorld News, U.S. asset management firm PGIM expects the Federal Reserve to raise interest rates three times this year to curb overheating in the economy, and to reverse rate hikes in 2027. PGIM states that the U.S. economy is "exceptionally strong" and inflation remains high, requiring new strategies. Considering that the Federal Reserve has failed to achieve the 2% target for five consecutive years, PGIM believes that rate hikes will enhance the Fed's credibility and anchor inflation expectations. Additionally, PGIM predicts that the Fed will cut rates three times in 2027, with the final interest rate falling to 3.375%, below the current rate, possibly approaching a neutral rate.