The Fed has almost lost patience: dots show strong support for cuts in 2019

The Fed is taking very seriously the increasing risks to growth, and acknowledges that the crosscurrents the economy is facing are stronger and more persistent than what previously thought; therefore, a strong response may be needed. 

Highlights:

  • Rising risks to growth have convinced a large number (eight out on seventeen) of FOMC members that rate cuts are needed by the end of the year.
  • The macro forecasts have not changed significantly, showing that accommodation is meant to avoid tail risks to the economy. Inflation is expected to go back to 2% at a slower pace.
  • We confirm our view of a 50 bps reduction by the end of the year, with the fist cut in July. Risks are tilted towards a more aggressive move.

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THE FED HAS ALMOST LOST PATIENCE: DOTS SHOW STRONG SUPPORT FOR
CUTS IN 2019

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