For some time the Federal Reserve has been guiding for and markets have been pricing for a fourth rate hike at this December meeting. However, this has come amid the backdrop of significantly reducing expectations of future rate hikes. That is why today’s meeting of the from the FOMC has the potential to be an absolutely crucial decision. The Federal Reserve has hiked interest rates for a fourth time this year, by 25 basis points to a Fed Funds range of 2.25%/2.50%. However, this is not the big takeaway. The changes to the dots and economic projections are the crucial aspect. We look at the implications.
This meeting could be the most important announcement that the FOMC has made for a long while. It is a meeting which has confirmed a shift in expectation of future hikes and could now put the Fed on a path to ending its tightening cycle next year. What are the key changes to be aware of?
FOMC Statement changes
The main takeaways here is that “some” further rate hikes will be needed, whilst the FOMC also confirms that it is now looking at global economic conditions and the implications for the US.
A rate hike of 25 basis points
This was broadly priced in for weeks (although expectation of this has been dropping in recent days). No surprises
Changes to growth and inflation forecasts
The changes to the economic projections are below.