Fed: Dot plot continues to show on hold stance in 2020 – Rabobank

Rabobank analysts point out that the FOMC kept the target range for the Federal Funds rate unchanged yesterday, and the dot plot continued to show the Fed on hold in 2020, before hiking in 2021 and 2022.

Key Quotes

“Powell was rather dovish, stressing that there was less reason to hike than after previous mid-cycle adjustments in the 1990s because there is now less upward pressure on inflation.”

“Powell was sanguine about the problems in the repo markets, despite market chatter that the complete opposite stance was more logical, and said that temporary upward pressures were not uncommon year end, and they appear to be manageable.”

“While the Fed thinks it has everything under control, the same forecasting framework that helped us pinpoint the end of the Fed’s hiking cycle in 2019 is also indicating that the FOMC will have to cut rates all the way back to zero before the end of 2020.”