JPMorgan Sees 25bps Cut by FOMC Next Week

JPMorgan Sees 25bps Cut by FOMC Next Week

The analyst comments "At the conclusion of next week’s FOMC meeting we expect the Committee will lower the target range for the fed funds rate by 25bp to 4.25-4.5%. We don’t look for major changes in the statement language or the forward guidance, even though we still think a pause is likely at the January meeting. We think that the economic forecasts will show better growth and firmer inflation this year, and that the median interest rate forecast dots will be revised to show three cuts next year instead of four, as in the September dots. We believe the longer-run median dot could move up to around 3% or slightly higher. In the press conference we expect that Powell will stay away from strong signaling about January, and that he will also avoid specifying which policy assumptions are embedded in the Committee’s economic forecasts. We don’t expect any dissents, but we do think there could be a 5bp technical adjustment in the overnight reverse repo rate"

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