Highlights of the September 2018 US Fed FOMC monetary policy meeting 26 September 2018
- Prior 1.75% – 2.00%
- RAISES TARGET INTEREST RATE TO 2-2.25 PCT, SEES ONE MORE RATE HIKE THIS YEAR AND THREE IN 2019
- REMOVES FROM STATEMENT DESCRIPTION OF MONETARY POLICY AS REMAINING ACCOMMODATIVE
- SEES FASTER ECONOMIC GROWTH THIS YEAR AND SLIGHTLY FASTER GROWTH NEXT YEAR IN NEW ECONOMIC PROJECTIONS COMPARED WITH JUNE PROJECTIONS
- SEES SLIGHTLY LOWER PCE INFLATION IN 2019 COMPARED WITH PRIOR PROJECTIONS; PROJECTIONS FOR 2019 CORE PCE AND 2019 UNEMPLOYMENT RATE UNCHANGED
- IN STATEMENT DOES NOT CHANGE DESCRIPTION OF ECONOMY; REPEATS THAT JOBS GAINS HAVE BEEN STRONG AND HOUSEHOLD SPENDING AND BUSINESS FIXED INVESTMENT HAVE GROWN STRONGLY
- REPEATS EXPECTS FURTHER GRADUAL INCREASES IN FED FUNDS RATE WILL BE CONSISTENT WITH SUSTAINED ECONOMIC EXPANSION, STRONG JOBS MARKET AND INFLATION OBJECTIVE
REPEATS RISKS TO THE ECONOMY APPEAR “ROUGHLY BALANCED” - SETS INTEREST RATE PAID ON EXCESS RESERVES AT 2.20 PERCENT, KEEPING IT 5 BASIS POINTS BELOW TOP OF FED FUNDS TARGET RANGE
- VOTE IN FAVOR OF POLICY WAS UNANIMOUS
Forecasts
- 2018 GDP up a touch to 3-3.2% vs 2.7-3.0%
- 2019 2.4-2.7% vs 2.2-2.6%
- 2020 1.8-2.1% vs 1.8-2.0%
Dots pretty much confirm 3 hikes in 2019
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