by Calculated Threat on 11/19/2024 03:53:00 PM
From housing economist Tom Lawler:
In response to CME FedWatch, the “market-based” chance that the FOMC will lower its federal funds fee goal by 25 bp at its December assembly is about 59%. Of us may even play shut consideration to the discharge of the FOMC’s Abstract of Financial Projections (SEP) from assembly members. Under is a desk displaying among the key projections from the final 4 SEPs.
Click on on desk for bigger picture.
In comparison with the SEP from the September FOMC assembly, actual GDP progress for 2024 will in all probability be vital increased than the median projection (and close to the highest of the forecast vary), the unemployment fee will seemingly be considerably beneath the median projection, and core PCE inflation will seemingly be increased than the median projection.
With progress considerably increased and inflation considerably increased than projected in September by most assembly members within the second half of this 12 months (and progress was a LOT increased than projected by some assembly members), one would possibly count on that (1) the projected path of the federal funds fee over the following 12 months will indicate fewer fee cuts than was the case in September, and (2) the median (and common) long-term implied impartial rate of interest will once more transfer up.
Here’s a chart displaying futures fee for the federal funds fee for December 2024 via December 2025 for June 12, September 18, and November 15 of this 12 months.
For the second half of 2025, fed funds futures charges on November 15 had been virtually 100 bp increased than was the case on September 18, and had been about 25 bp decrease than was the case on June 12.
