MNI Fed Preview - March 2024: Analyst Outlook

Mar-18 17:21By: Tim Cooper

Note to readers: This is an update to the MNI Fed preview published on Friday Mar 15. Please see Page 36-41 of this document for sell-side analysts' outlooks for the March FOMC decision and future policy.

EXECUTIVE SUMMARY:

No 2024 Dot Change Expected, But Some Longer-Run Intrigue

Going into the March FOMC meeting, analyst expectations for 2024 Fed rate cuts have converged firmly on June as the starting point, but there remains a wide range of expectations otherwise.

The “median” analyst whose previews we read for this report saw 75bp of Fed funds rate cuts in 2024 compared with 125bp pre-January meeting. There is no firm consensus though, with a wide range of expectations running from 50bp to 225bp (had been 75bp to 275bp pre-January FOMC).
The most aggressive rate cut path we have seen is from UBS, whose analysts expect 225bp of cuts in 2024 starting in June, with 150bp more in Q1 2025.
TD and Danske see cuts starting in May; Nomura sees July while Nordea sees September.
For the updated Dot Plot, there is firm consensus that there will be no change to the FOMC medians for rates (20 of 24 analysts see 3 cuts, or 4.6%, remaining the base case for 2024).
Barclays, JPMorgan, Nomura, and Standard Chartered see a rise to a 4.9% 2024 median, while Deutsche, Goldman Sachs, and Nomura see increases further out (2025-26).
Of 18 analysts who expressed an opinion on the longer-run dot, 6 see an increase from 2.5% in the December Dot Plot.
Several analysts expect the GDP and inflation forecasts for 2024 to be revised upward slightly. No analyst expects significant changes to the Statement.
On tapering QT, the general expectation remains that the Fed will cap Treasury runoff at $30B (vs $60B currently) around mid-year, with an announcement in May / June.