The majority of analysts expects the FOMC to leave its Dot Plot funds rate medians unchanged in March.
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EXECUTIVE SUMMARY:
- The majority of analysts expects the FOMC to leave its Dot Plot funds rate medians unchanged in March compared with the December meeting.
- That would imply the Fed is still pencilling in 50bp of cuts in 2025 (to 3.9%) and 2026 (to 3.4%), with a further 25bp cut in 2027 (to 3.1%).
- However, the few analysts who do see a change suggest it could be in opposite directions: some (including Barclays and UBS) see a cut removed from the 2025-26 path, while at least one other (Citi) sees an additional cut signalled. And some saw risks that the distribution would skew more hawkish than in December (ie fewer cuts), with others seeing it potentially skewing more dovish (ie more cuts).
- BofA sees the median rate path flattening out after 2026, with 2027 moved up 25bp to 3.4%.
- They also have the highest longer-run rate median expectation, at 3.25% - the median analyst sees it unchanged at 3.0% but several see it rising to 3.1%.
- Macro Forecasts: Analysts are basically unanimous that the macroeconomic projections will show a downgrade to GDP growth and upped inflation forecasts for 2025, to varying degrees.
- QT: Only a handful of analysts (BofA, Deutsche) see a taper/pause/halt in QT announced at this meeting, with most seeing May as the earliest date for an announcement.
- Future action: Expectations for future cuts are limited, with TD (100bp), and Citi/Danske/Wells Fargo (75bp) seeing the most 2025 cuts. Some see the easing cycle as over, including BofA, Nordea, and RBC.
- Several see the Fed holding off on rate cuts for several months/quarters before restarting cuts: that includes Nomura and Deutsche.
Note to readers: This update of our Mar 14 preview includes analyst expectations
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