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What To Expect From The March FOMC Meeting
As a practical matter, it doesn't make much difference whether the Fed tips two or three rate cuts for 2024 in the dot plot refresh at the March policy gathering.
The dot plot's not a plan, after all, and as Jerome Powell noted at the November meeting, it has a short shelf life depending on the circumstances. True, a diagram showing projections for the price of money from the people who set that price should have a lot of informational value. The problem is, those projections are informed by th
The last SEP showed the FOMC does not project core PCE to reach 2.0% until the end of 2026. End 2024 projection is 2.4%. The Fed is not in a rush to get to 2.0% and won’t react overmuch to two months’ MOM readings.
The FOMC also projected GDP growth slowing significantly and UE rising in 2024. Investors and pundits’ hair may be lighting up on hints of economic slowdown + job market softening, but from the Fed’s perspective, they expect it.
Great discussion and analysis. Thx.
This time, I don’t even think the Fed’s decision or Powell’s comments at the presser will make much difference to market direction. Unless the Fed does something beyond “a little more dovish” or a “little more hawkish” than expected, I doubt it lives up to the hype. The market seems to be shifting its focus to increases in commodity demand and/or prices. Whether that’s b/c of China or a weaker dollar caused by market perception Fed is missing the boat on inflation or growing belief that Trump will win–impossible to know. But last couple weeks were different…
Of course, market also knows Fed will step in big if something breaks.
Something helpful or meaningful in every post. Today I learned that I am a critic.
“Critics see a glaring asymmetry: TIghter financial conditions are a reason not to squeeze in an additional rate hike, but looser financial conditions aren’t a reason to forego rate cuts.”
I would just add if not “forego,” then at least postpone and in the process, force market pricing closer toward the Fed’s projections, which is undoubtedly a good thing. To me, the evaporating of the additional cuts once priced by the markets are loosely analogous to what we experienced with job openings rather than unemployment bearing the brunt of the Fed’s tightening in the job market. (So far at least).