A recap of the Federal Open Market Committee (FOMC) decision and Chair Powell's rambling press conference can be found here:
There is little doubt the path is higher for Fed rates still, the question of course is how high.
RC are the same, projecting further rate hikes but are wary of expecting too aggressive an approach from the Fed:
- We’re mindful that the Fed is leaning hawkish to prevent the sort of premature easing in financial conditions we saw earlier this summer, and might not actually deliver the rate hikes shown in today’s dot plot. But risks around our forecast for fed funds to peak at 3.75-4% later this year are tilted firmly to the upside and a single CPI print between now and the Fed’s early-November meeting might not be enough for the committee to dial back the pace of rate hikes as we were assuming.
- While the near-term profile might be more aggressive, we continue to think sluggish growth over the second half of this year and some improvement in the inflation backdrop will allow the Fed to pause its tightening cycle in 2023. We continue to expect a mild recession next year.
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This is the most recent Dot Plot from Wednesday's SEP:
Note that circled dot and what its important:
