The FOMC will continue to exercise patience in policy setting at its March meeting.
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EXECUTIVE SUMMARY:
- The FOMC will continue to exercise patience in policy setting at its March meeting, leaving the Fed funds target range on hold at 4.25-4.50% and making no changes to its formal rate guidance.
- The updated quarterly economic projections will show higher inflation and weaker growth in 2025 compared with December's forecasts, in large part due to the impact of ongoing and expected future government policy shifts.
- The lack of conviction to resume the easing cycle comes in the context of significant government policy shifts posing arguably two-way risks to both the inflation and employment mandates, as well as mixed economic activity indicators and still-elevated inflation readings.
- This outlook is unlikely to result in any changes to the "Dot Plot" Fed funds rate forecast medians, which are likely to continue to show expectations for 2 rate cuts in 2025, and a further 2 in 2026.
- However, Chair Powell's press conference is likely to emphasize the uncertainty faced by the Committee as it navigates the months ahead, while also reiterating that the "current policy stance is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate”.
Note to readers: MNI’s separate preview of sell-side analyst summaries to follow on March 17
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