December 19, 2018

The Fed hikes rates, but signals slower pace in monetary normalization

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In Short

The widely expected increase in rates was accompanied by a reduction to two of the number of rate hikes deemed appropriate for 2019. A final increase should follow in 2020. The expected terminal rate decreased to 3.1%.
The Fed hikes rates, but signals slower pace in monetary normalization
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Highlights:

  • The widely expected increase in rates was accompanied by a reduction to two of the number of rate hikes deemed appropriate for 2019. A final increase should follow in 2020. The expected terminal rate decreased to 3.1%.
  • The recent weak macro data flows, the softening in global growth and the tightening in financial conditions led to a mild downward revision of the growth forecast for 2019. Inflation is no longer expected to overshoot the target.
  • In the press conference Powell continued to push its view that the Fed is now even more data dependent and the importance of projections and the dots must not be exaggerated.

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THE FED HIKES RATES, BUT SIGNALS SLOWER PACE IN MONETARY NORMALIZATION

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