Rate Projections At tomorrow’s Fed meeting, we will receive their latest outlook on monetary policy and Summary of Economic Projections or SEP.
If you recall, at the last projections meeting back in December the Federal Reserve signalled that it was likely to reduce interest rates by roughly 75 basis points in 2024, based on the median estimate of its policy members. This forecast could now be in jeopardy. While GDP may decline in line with their estimates, inflationary pressures have re-emerged and are likely to sway the median interest rate outlook higher for 2024.
8% for 2024, 40 basis points higher than the Fed’s current estimate. The Fed must acknowledge this and revise up their Core PCE projections for 2024 and possibly 2025 as well. Decision on QT Under normal circumstances, if the Fed is revising up both is inflation and growth forecasts at a projections meeting, you would expect the market reaction to be fairly significant in terms of both the bond market and the Dollar. The fly in the ointment this time however is the question regarding QT.
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