Fed signals extended patience & announces end of QT

The Fed’s revised economic projections, which now imply no rate hikes this year, together with the announcement that it will halt its balance sheet run-down in September, came as a positive surprise for the markets. But we think the Fed’s forecasts are still too upbeat. With economic growth likely to remain well below trend throughout 2019, we expect the Fed’s next move will be to cut rates in early 2020.