Highlights from the December 2018 FOMC press conference 19 December 2018

Opening remarks

  • Some cross currents have emerged
  • Stronger econ is benefiting most Americans
  • We have seen developments that signal softening
  • Financial market volatility has increased
  • Financial conditions have tightened
  • Conditions haven’t fundamentally changed the outlook
  • Lower rate of dot plot should support the economy
  • Policy is not on a preset course
  • Most on the FOMC see econ doing well in 2019
  • Fed raised rates faster than expected in 2018
  • Policy will provide a smaller boost to the econ in 2019 (in other words, the economy has got to learn to stand on its own two feet)


  • Inflation has come in a touch below expectations
  • Inflation trend allows FOMC to be more patient going forward
  • There’s a fairly high degree of uncertainty on rate path
  • There’s been a sense of concern among firms and market people about global growth
  • Political concerns play no role in Fed discussions and decisions
  • We’re not looking at changing our inflation target
  • Dot plot is useful
  • Econ has shown participation can move higher.
  • Wages increases have been gradual but I expect them to continue
  • Prime age labour participation remains low

Pretty low key all said and done. Markets have been all over the place with USD up across the board but a risk off mood seeing JPY buying as Us stocks and 10 year yields drop. That’s kept USDJPY hopping from one foot to the other. but in a tight range.

Probably the key comment is the one on Fed policy offering a smaller boost to the economy next year. Welcome to normalisation folks. It’s been a while and some in the market will be of a certain age not to have even been through it.

the question now becomes “what happens next?”. That in itself could be quite messy as we’re now going to see shifting Fed pricing mixed in with holiday squaring. It could be like watching a forex food blender.

Ryan Littlestone

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