FOMC Hikes Rates As Expected: Expects 3 Hikes, Faster Growth As Two Dissent

With a 98.3% probability heading in, there was really no doubt the most-telegraphed rate-hike ever would occur, but all eyes are on the dots (rate trajectory shows 3 hikes in 2018), inflation outlook (unchanged), and growth outlook (faster growth in 2018), and lowered unemployment outlook to below 4%. The Fed also plans to increase its balance sheet run off to $20 billion in January.
*FED RAISES RATES BY QUARTER POINT, STILL SEES THREE 2018 HIKES *FED SEES FASTER 2018 GROWTH, LABOR MARKET STAYING `STRONG’ *FED: MONTHLY B/SHEET RUNOFF TO RISE TO $20B IN JAN. AS PLANNED The dissents by Evans and Kashkari are significant as they send the signal that there is a significant fraction of the FOMC that would like to put off additional rate hikes until inflation is moving back closer to 2%. You could expect additional dissents in March if the FOMC goes ahead with a hike then, unless inflation rebounds by then.
On the other hand, the median target “dot” for 2020 rose to 3.063% vs 2.875% in September; suggesting even further tightening in store.
The Fed’s forecasts improved for growth and unemployment, while keeping inflation unchanged:

This post was published at Zero Hedge on Dec 13, 2017.

 

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