FOMC dot plot & central tendencies from December 2023 meeting. EOY 2024 rate 4.6%, -50bps.

<p>The FOMC dot plot from September 2023 showed the median rate at the end of 2024 at 5.1%. In the December report:</p><ul><li>For 2024, the median fed funds target rate is now 4.6% vs 5.1% in June – down -0.50%</li><li>For 2025, the median fed funds target rate is now 3.6% vs 3.9% in June – down -0.30%</li><li>For 2026, the median fed funds target rate is now 2.9% vs 2.9% in June – unchanged. </li></ul><p>Below is the new dot plot from December:</p><p>For comparison, the dot plot from September 2023 showed the following:</p><p>Regarding the central tendencies for GDP, Unemployment and PCE inflation (headline and core) below is the table with comparisons from September:</p><p>Highlights from the central tendencies:</p><ul><li>PCE inflation for 2024 moved from 2.5% down to 2.4%</li><li>Core PCE inflation for 2024 moved from 2.6% to 2.4%</li><li>Unemployment for 2024 remained unchanged at 4.1% </li><li>GDP for 2024 moved from 1.5% to 1.4%</li><li>The Fed does not see inflation to reach 2.0% until 2026 although they do see inflation at 2.1% at the end of 2025 (close enough).</li><li>Unemployment rate peaks at 4.1%. </li><li>GDP growth is modest at below 2%. </li></ul><p>The Fed pricing for 2024 now at 135 bps vs 115 bps prior to the release. . </p><p>Stocks are higher. Yields are lower. US dollar is lower </p>

This article was written by Greg Michalowski at www.forexlive.com.