Federal Reserve: Policy path reshaped – Rabobank

Source Fxstreet

Rabobank’s RaboResearch Global Economics & Markets team reviews the latest FOMC decision, noting a unanimous 25 bps hike in the federal funds rate. The Committee’s projections point to one more hike this year, then a prolonged hold through 2027, with the first cut in 2028. The report highlights a higher neutral rate, a steeper policy path, and the Fed’s determination to protect its monetary policy independence under Chair Warsh.

Fed hikes and long hold signalled

"Today the FOMC unanimously decided to raise the target range for the federal funds rate by 25 bps."

"The Committee’s projections showed that they anticipate another hike before the end of the year, before remaining on hold through 2027. The first cut is expected in 2028."

"The new set of economic projections essentially showed a new reaction function with a much higher policy rate trajectory needed for a similar inflation outcome. This was underlined by an upward revision of the neutral rate."

"Overall, the main message from today’s FOMC decision, projections and press conference is that the Committee is committed to defend its monetary policy independence."

"In fact, the projections suggest that by the time that President Trump leaves office, the Fed’s policy rate will be higher than when Chair Warsh started."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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