FED
While the most closely-eyed median Fed funds rate dots in the new quarterly projections are unlikely to change in March – still showing 50bp of cuts in each of 2025 and 2026 – the distribution is likely to shift.
- MNI regards the risks as mostly tilted to a more hawkish distribution versus December, which appears to be a difference from consensus as multiple analysts see risks weighed toward more rather than fewer cuts in the Dot Plot.
- We think that for 2025 at least, the higher dot submissions could rise in number while the lowest could diminish.
- The hawks are likely to become a little more hawkish in light of the lack of disinflation progress since the December meeting and some signs of rising inflation expectations, while the the doves have sounded less confident that inflation will pull back sufficiently to warrant more than 2 cuts this year.
- Regardless of any distributional changes, the lack of movement in the medians vs December is illustrative of a Committee that is somewhat paralyzed as it awaits outside events to unfold.
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