FED: NY Fed Report Shows Projection With Portfolio Reduction Ending 2025

We've just published our round-up of 33 sell-side analysts' previews of the March 2024 FOMC meeting - PDF here:

MNIFOMCAnalystPreview-March2024.pdf

• 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.

• Usage of the Fed’s O/N RRP increased $27bn to $441bn today from Friday’s new recent low of $414bn.
• It’s a relatively small increase considering expected inflows from GSEs as is typical for this time of the month.
• Wrightson ICAP had estimated an increase of circa $60bn.
• The number of counterparties increased by 2 to 70, still one of the lowest recently.

• Nikkei reports that the BoJ are to end yield curve control and ETF purchases at their meeting on Tuesday, writing that: "The BoJ is poised to decide to end its yield curve control and purchases of risk assets as well as call time on negative interest rates Tuesday, Nikkei has learned, making the biggest change in Japanese monetary policy in nearly two decades"
• Little really new here, and broadly inline with the various MNI, JiJi and Nikkei sources pieces we've seen over the past fortnight or so - but going another step to underscoring expectations for tonight's decision.

We've also fielded some questions on the timing of the BoJ decision. As always, there's no set time - but these are the timings of the past six decisions:

• Jun'23: 0347 BST
• Jul'23: 0428 BST
• Sep'23: 0352 BST
• Oct'31: 0327 GMT
• Dec'23: 0249 GMT
• Jan'24: 0309 GMT