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Nov CPI Could Impact Statement, Won't Impact Decision / Dot Plot

FED
There are bound to be some changes of opinion on the outcome of Wednesday's FOMC decision after a second consecutive downside inflation surprise in November.
  • MNI doubts there would be any substantial changes in the Dot Plot/SEP (with submissions having been due last Friday, revisions can be submitted today, but that is basically unheard of, and a single data point probably isn't enough to warrant a change in forecast), let alone the 50bp hike decision.
  • However, November's reading probably does tilt the balance toward participants favoring a slightly more dovish statement. The key part is the "ongoing increases" in the funds rate; there is a higher chance now that this is modified to say something like "some further increases" in rates is appropriate, albeit with a hawkish characterization on keeping rates in restrictive territory for "some time".
  • This may also be a meeting too early, but the characterization of inflation may need an update, perhaps with a more detailed description of services vs goods pressures.
  • Also, "higher food and energy prices" may remain but could be taken out as a somewhat dovish move: the "food" part was introduced at the July meeting, when food prices had been rising +1% M/M on average in H1; November's print was half that. "Energy" was introduced in March when prices were soaring amid the Ukraine crisis; it printed -1.6% M/M in Nov.
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