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MNI Fed Review-Dec 2024: New Cautious Phase Begins

The December FOMC meeting brought multiple hawkish surprises.
USCentral Bank ReviewHomepageFed - ReviewCentral Bank ReportsMarketsStoryNorth America

EXECUTIVE SUMMARY: 

  • The December FOMC meeting brought multiple hawkish surprises.
  • Not only were the FOMC’s new rate and inflation projections raised more than expected, the Statement was more cautious, and there was even a surprise dissent against the well-anticipated 25bp rate cut.
  • As Chair Powell put it in the press conference, the FOMC is “in a new phase in the process” of easing policy, and “from this point forward, it's appropriate to move cautiously and look for progress on inflation.”
  • Yields and the US dollar rose sharply, and futures markets now show just one-and-a-half cuts remaining in the cycle.
  • The degree to which the impact of potential Trump administration policy shifts impacted upon participants’ more hawkish outlooks was not entirely clear, but either way, a January rate cut looks extremely unlikely.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK:

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EXECUTIVE SUMMARY: 

  • The December FOMC meeting brought multiple hawkish surprises.
  • Not only were the FOMC’s new rate and inflation projections raised more than expected, the Statement was more cautious, and there was even a surprise dissent against the well-anticipated 25bp rate cut.
  • As Chair Powell put it in the press conference, the FOMC is “in a new phase in the process” of easing policy, and “from this point forward, it's appropriate to move cautiously and look for progress on inflation.”
  • Yields and the US dollar rose sharply, and futures markets now show just one-and-a-half cuts remaining in the cycle.
  • The degree to which the impact of potential Trump administration policy shifts impacted upon participants’ more hawkish outlooks was not entirely clear, but either way, a January rate cut looks extremely unlikely.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK:

Keep reading...Show less