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Underlying economic strength signals no need to cut Updated SEP may feature higher median interest rate projection Speculation around Powell’s replacement will plague proceedings We expect the underlying strength in the economy and uncertainty over the …
11th June 2025
Contraction in first-quarter GDP not a worry Core inflation yet to capture tariff impacts Fed will remain in “wait-and-see” mode for some time A contraction in GDP and near-flatlining in core PCE prices would usually be more than enough to persuade …
30th April 2025
Powell not yet concerned by signs of weak first-quarter GDP growth Still too hot inflation and rising inflation expectations will concern the Fed But new economic projections will probably still point to some loosening this year Comments from Chair Jerome …
12th March 2025
Solid activity data support case for a pause Mildly stagflationary Trump policies imply maximum of two more rate cuts this year Annual voting rotation won’t affect policy outlook We expect the strength of the economy and uncertainty over immigration and …
22nd January 2025
Another 25bp rate cut incoming next week Fed’s projections will ignore potential impact of tariffs and immigration curbs Fed’s independence probably safe Fed to continue steady policy easing We expect the Fed to cut its policy rate by an additional 25bp …
11th December 2024
Stronger data point to a more gradual pace of loosening Fed will not surprise financial markets amid election uncertainty We see the terminal rate higher under Trump than Harris With the economy on strong ground, we expect the Fed to shift to a more …
31st October 2024
Recent data favour a 25bp vs a 50bp interest rate cut in September New SEP to show more cuts this year We expect 200bp of cumulative rate cuts vs 250bp priced into markets With the labour market data more consistent with an economic slowdown rather than …
11th September 2024
Disinflationary trend broadening out Fed officials growing more concerned about labour market downside risks Interest rate cut likely in September With the disinflationary trend broadening out and the unemployment rate rising, recent comments from Fed …
24th July 2024
Disinflationary trend gradually reasserting itself Economy and labour market losing momentum New projections should still show one or two rate cuts this year With no prospect of the Fed adjusting policy next week, the focus of the FOMC meeting will be the …
5th June 2024
Hot inflation data dash hopes for rate cuts anytime soon Will take longer for the Fed to get “greater confidence” about path to 2% inflation. Nevertheless, cuts in 2024 still plausible The recent run of stronger inflation and activity data has …
24th April 2024
Recent data leave Fed still seeking “greater confidence” that inflation is heading to 2% New SEP likely to be marginally more hawkish We still expect first rate cut in June and 200bp of easing in total Data dependence will remain the order of the day at …
13th March 2024
March rate cut is data dependent Rate expectations have rebounded Officials need to see more evidence that disinflation will be sustained We think that evidence is coming, paving way for a March rate cut At next week’s FOMC meeting, we don’t expect the …
24th January 2024
Officials not yet willing to fully endorse rate cut bets; tightening bias could be retained New SEP should confirm rates are at the peak but significant downgrades unlikely We expect the first rate cut in March and 175bp of easing in total next year With …
6th December 2023
Fed to hold rates at 5.25%-5.50%, and keep further tightening on the table… …but surging long-term Treasury yields reducing appetite for final hike Sharp decline in core inflation to see rates cut to 3.25%-3.50% by end-2024 We don’t expect a significant …
25th October 2023
Fed to keep rates unchanged at 5.25%-5.50% next week New SEP to show officials less convinced of need for further hikes Rapid decline in inflation will see rates cut to 3.25%-3.50% by end-2024 The Fed is set to keep rates unchanged at 5.25%-5.50% at the …
13th September 2023
25bp rate hike next week likely to be the last, with rates peaking at 5.25%-5.50% Run of better inflation data to convince Fed to scrap plans for further hikes Falling inflation and weaker economy will see rates cut to 3.25%-3.50% by end-24 Fed officials …
19th July 2023
June pause to be followed by July hike, taking rates to a peak of 5.25%-5.50% Labour market resilience means we now don’t expect rates to be cut until Q1 next year Fed funds target range to fall to 2.75%-3.00% by end-2024 There appears to be enough …
7th June 2023
25bp hike next week likely to be the last, with rates peaking at 5.00%-5.25% Economic weakness and falling inflation to prompt rate cuts later this year We expect fed funds target range to have fallen to 2.50%-2.75% by end-2024 The Fed looks set to …
26th April 2023
Fed has difficult decision to weigh financial stability needs against inflation target. On balance, we think the Fed will still push ahead with a 25bp hike. But inevitable pull-back in bank lending means Fed should be cutting before year-end. The Fed …
15th March 2023
Many officials support downshift to 25bp hike at upcoming policy meeting. But officials still see multiple hikes beyond next week. We expect rates to peak just below 5%, with cuts starting later this year. We expect the Fed to downshift to a 25bp rate …
25th January 2023
Pace of tightening to slow with 50bp rate hike Powell to maintain hawkish line; projections may show higher peak in rates But further good news on inflation will prompt a rethink soon The Fed is set to slow the pace of tightening with a 50bp rate hike …
7th December 2022
Stubborn core inflation points to fourth consecutive 75bp rate hike But pace of tightening likely to slow as policy becomes more restrictive Recession and falling inflation to prompt rate cuts by the end of next year Fed officials are gearing up for …
26th October 2022
August CPI data guarantee rate hike of at least 75bp next week New projections may show rates peaking slightly higher We still expect eventual sharp fall in inflation to prompt rate cuts next year The continued strength of core inflation points to …
14th September 2022
With inflation expectations contained, Fed won’t risk abrupt 100bp shock Pace of rate hikes likely to slow once Fed has policy back to neutral stance Fed funds rate to peak at close to 4% early next year and fall below 3% by end-2024 The Fed is set to …
20th July 2022
Fed to raise rates to 1.25%-1.50% and signal another 50bp hike in July Stubborn inflation may make September meeting a close call between 25bp or 50bp We expect fed funds target range to peak at 3.25%-3.50% in 2023 H1 The Fed is set to hike interest rates …
8th June 2022
50bp hike likely to be first in series of three over next few policy meetings QT to be launched next week – caps will be ramped up to $95bn per month Economy should bend rather than break under higher rates We expect the Fed to hike interest rates by 50bp …
27th April 2022
We expect five 25bp rate hikes this year and another four next year War in Ukraine doesn’t alter policy outlook Fed likely to downplay inflationary impact of energy price surge We expect the Fed to hike interest rates by 25bp at next week’s FOMC meeting …
9th March 2022
Fed usually flags start of tightening cycle ahead of time Balance sheet run-down likely to come sooner and be more aggressive than 2017/18 FOMC will have more hawkish tilt until Biden’s nominees are confirmed With many Fed officials now either explicitly …
19th January 2022
Fed markedly shifts stance, with inflation no longer seen as transitory Taper will be stepped up – asset purchases to end in spring rather than summer We now expect two hikes in 2022, followed by four hikes in 2023 In sharp contrast to the surprisingly …
8th December 2021
Fed to announce $15bn per month asset purchase taper beginning in November Statement may reveal growing concern about higher inflation… …but we still expect weaker GDP growth to delay rate hikes until 2023 The Fed is set to announce at next week’s FOMC …
27th October 2021
Fed may signal – but not formally announce – taper will begin later this year Weaker incoming data will help keep rates on hold until 2023 New 2024 forecasts will provide important clues to Fed’s reaction function We think the sharp slowdown in employment …
15th September 2021
Next week’s meeting unlikely to bring new guidance on asset purchases Tapering still on track to begin in early 2022; September announcement possible Rates to remain on hold until 2023 A few regional Fed Presidents are pushing for the Fed to begin …
21st July 2021
Fed to begin discussion of how asset purchases might eventually be tapered But disappointing payrolls suggest “substantial further progress” still some way off Surging inflation means Fed’s projections need a re-think Fed officials may finally begin …
9th June 2021
FOMC statement likely to strike more optimistic tone… …but Powell to emphasise that policy changes are still some way off Asset purchase taper unlikely until next year with rates on hold until late-2023 We expect the statement following next week’s FOMC …
21st April 2021
Fed will not sound the alarm about rising bond yields Officials will revise up GDP and inflation forecasts in light of $1.9trn fiscal stimulus… …but projections could still signal rates on hold through end-2023 We expect the Fed to leave policy unchanged …
10th March 2021
Policy settings & guidance will be left unchanged Vaccinations & additional fiscal relief shift debate towards tapering asset purchases Fed won’t taper until 2022, but may pre-announce plans around Jackson Hole Aside from acknowledging the weakness in the …
20th January 2021
Officials unconvinced of need for, or benefits of, further stimulus But guidance on asset purchases is set to be updated Strength of rebound in inflation next year could catch the Fed off-guard We expect the Fed to keep its main policy settings unchanged …
9th December 2020
Solid incoming data mean Fed officials in no rush to provide more accommodation More serious wave of coronavirus infections could prompt more easing Expectations of a big post-election stimulus would pose a dilemma Having rolled out major changes over the …
28th October 2020
New average inflation framework points to more policy support But Fed officials apparently in no rush to provide more accommodation Modest tweaks risk disappointing markets The Fed’s new average inflation framework implies that more stimulus measures are …
9th September 2020
Officials prefer strengthening forward guidance over yield caps New language in statement might introduce a soft form of average inflation target Fed may eventually need to expand Treasury purchases again The upcoming FOMC meeting, which concludes on 29 …
22nd July 2020
Low yields mean there is no rush to adopt yield curve control FOMC could make an impact just by publishing interest rate projections again Fed slow to roll out its 13( 3 ) emergency lending facilities The Fed has several different policy options for …
3rd June 2020
We estimate that non-farm payroll employment fell by 9 million in May, taking the cumulative decline since February close to 30 million and pushing the unemployment rate above 20%. The loss of 20.5m jobs in April was as expected based on the tsunami of …
28th May 2020
Fed funds target range will be stuck at zero for foreseeable future Easing financial market stress suggests Treasury purchases will continue to slow But new lending facilities could eventually push balance sheet above $10trn With the Fed having already …
22nd April 2020
Fed to follow last week’s emergency cut with another 50bp reduction next week Fed funds rate likely to return to near-zero bound at April policy meeting Plans to slow pace of balance sheet expansion to be abandoned We expect the Fed to cut interest rates …
11th March 2020
Risk still modest, but models can’t capture virus fears The recent re-inversion of the Treasury yield curve and the sharp sell-off in equities, due to growing fears that the new coronavirus will develop into a full-blown pandemic, have reignited fears …
27th February 2020
Improving data, fading trade and global risks remove need for further rate cuts Policy unlikely to be tightened again for foreseeable future Shelton, Waller nominations a sign of things to come if Trump wins second term Signs of improvement in the …
22nd January 2020
Looser financial conditions & improving economic data mean no further cuts needed Fed will not want to repeat the mistake of raising rates prematurely With inflation set to remain low, Fed is now on prolonged hold The Fed’s less dovish language, against a …
4th December 2019
Loose financial conditions make a recession unlikely The risk of a recession occurring within the next year appears to have faded – with the yield curve un-inverting, financial conditions loosening and the incoming economic data still comfortably above …
20th November 2019
Officials have not pushed back on expectations for a 25bp cut this meeting Further slowdown in economic growth will prompt one final 25bp cut in December Rates would end up back at zero in a recession, but few signs one is imminent With the markets still …
23rd October 2019
Recession risk still elevated Our composite model suggests that the risk of a recession in 12-months’ time has fallen slightly to 17.9%, from above 20% a few weeks ago, as the rebound in the 10-year Treasury yield has reduced the inversion of the yield …
23rd September 2019
