MNI Fed Review-Dec 2024: New Cautious Phase Begins
Dec-18 22:18By: Tim Cooper
US
EXECUTIVE SUMMARY:
- The December FOMC meeting brought multiple hawkish surprises.
- Not only were the FOMC’s new rate and inflation projections raised more than expected, the Statement was more cautious, and there was even a surprise dissent against the well-anticipated 25bp rate cut.
- As Chair Powell put it in the press conference, the FOMC is “in a new phase in the process” of easing policy, and “from this point forward, it's appropriate to move cautiously and look for progress on inflation.”
- Yields and the US dollar rose sharply, and futures markets now show just one-and-a-half cuts remaining in the cycle.
- The degree to which the impact of potential Trump administration policy shifts impacted upon participants’ more hawkish outlooks was not entirely clear, but either way, a January rate cut looks extremely unlikely.
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