Bank of America analyst forecasts for the December Federal Open Market Committee (FOMC) meeting are in line with consensus:
- Fed to stay on hold and maintain the target range for the federal funds rate at 5.25-5.50%.
- to keep its balance sheet runoff policy in place.
BoA says the hiking cycle is done but the FOMC won't shut the door on further hikes should they be necessary.
More:
- Since the November meeting the bulk of incoming data has pointed to moderation in economic activity, disinflation, and a cooling labor market We think that this has increased the Fed's confidence that its current policy stance is appropriate and sufficiently restrictive. If so, upcoming Fed decisions will likely be more about how long to maintain its current policy stance than whether additional policy rate firming is needed.
- The Fed will still see one more inflation report before taking a decision in December. We think that headline and core CPI in November will come in at 0.0% m/m and 0.3%, respectively. Though this would represent an acceleration at the core relative to October, we see this as mainly coming from a reversal in the volatile lodging away from home category. The Fed also received some good news on inflation expectations, with the December University of Michigan Survey of Consumer Sentiment showing sizeable declines in one-year-ahead and five- to ten-year-ahead inflation expectations.
ps. More on the Michigan survey here:
Federal Reserve
The Federal Open Market Committee (FOMC) meeting is December 12 and 13.
