FED
Further to our Analyst Outlook for the September FOMC circulated Monday (PDF Link), overnight we received NatWest's updated Fed call which is the most dovish on the meeting that we have seen. They join JPMorgan and Wrightson ICAP (and the MNI Markets Team) in previewing a 50bp cut, but in addition to that have the most aggressive 2024 overall Fed rate cut and Dot Plot outlook:
- NatWest sees the FOMC penciling in a 4.1% end-2024 rate in the Dot Plot, implying another 75bp of cuts in Nov and Dec beyond NWM's 50bp expectation in September. In contrast, most analysts see a 4.6% median, with the lowest few otherwise seeing 4.4%.
- Their base case is for the Fed to end up exceeding the easing implied by even that dovish Dot Plot, with 50bp cuts in both Nov and Dec for 150bp of cuts in 2024: only a couple of analysts (Citi, CIBC) had as many as 125bp of cuts. (It's unclear what their 2025 forecast is from their preview but previously they'd seen 2 25bp cuts in early 2025 after the front-loading in 2024.)
- Note that NatWest had been one of the analysts seeing a 50bp cut in September as of early August (and 50bp in Nov and Dec), but had changed to 25bp after the solid CPI print last week - now they are back at 50bp: "While the latest communication has been less than ideal, it seems Powell cares more about getting policy right—getting back to neutral as quickly as they can—even if some in markets miss the signal".
- MNI's updated analyst table is below:
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