MNI Fed Preview - Dec 2023: All Downhill From Here

• The FOMC will hold rates in December for a 3rd consecutive meeting and the 4th in the past 5, further cementing expectations that the hiking cycle is over.
• But while the updated projections will acknowledge scope for cuts in 2024 alongside lower inflation forecasts, the FOMC will likely attempt a modest pushback against the recent loosening of financial conditions.
• Meaningful changes to the Statement’s tightening bias are unlikely until least one or two more meetings from now, while Chair Powell is likely to warn that the FOMC is proceeding carefully and is prepared to tighten further if required.
• With senior FOMC officials pointing out that rate cuts are consistent with maintaining restrictive policy in real terms as inflation falls, the "spread" between participants’ rate and inflation forecasts will be of increasing interest.

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