FOMC decision: No change to rates. 2024 median dot 4.6% vs 4.9% expected

<p>The headline is the median dot falling further than expected, putting a full 50 bps of easing into the curve rather than the 25 bps expected. In addition, there are five dots below that.</p><ul><li>Fed funds rate left unchanged at 5.25-5.50%, as expected</li><li>Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter</li><li>Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low</li><li>Tighter financial and credit conditions for households and businesses
are likely to weigh on economic activity, hiring, and inflation. The
extent of these effects remains uncertain</li><li>Fed refers to " the extent of any additional policy firming that may be appropriate" vs the extent of additional policy firming that may be appropriate" </li></ul><p>There has been a straightforward dovish reaction to this statement with the US dollar falling, Treasury yields dropping and US equities bid.</p><p>Dot plot:</p><ul><li>Dec 2024 median dot vs 5.1% prior</li><li>Dec 2025 median dot vs 3.9% prior</li><li>Dec 2026 median dot vs 2.9% prior</li><li>Longer run Fed funds projection vs 2.5% prior</li></ul><p>Growth projections</p><ul><li>2023 GDP 2.6% vs 2.1% prior</li><li>2024 GDP 1.4% vs 1.5% prior</li><li>2025 GDP 1.8% vs 1.8% prior</li></ul><p>Unemployment projections:</p><ul><li>2023 unemployment 3.8% vs 3.8% prior</li><li>2024 unemployment 4.1% vs 4.1% prior</li><li>2025 unemployment 4.1% vs 4.1% prior</li></ul><p>Inflation:</p><ul><li>2023 PCE inflation 2.8% vs 3.3% prior</li><li>2024 PCE inflation 2.4% vs 2.5% prior</li><li>2025 PCE inflation 2.1% vs 2.2% prior</li></ul><p>Core inflation:</p><ul><li>2023 PCE core inflation 3.2% vs 3.7% prior</li><li>2024 PCE core inflation 2.4% vs 2.6% prior</li><li>2025 PCE core inflation 2.2% vs 2.3% prior</li></ul><p>The previous economic projections were made at the Sept 20 FOMC meeting.</p>

This article was written by Adam Button at www.forexlive.com.