According to economists at Wells Fargo, there are no anticipated policy changes from the Federal Open Market Committee (FOMC) in its upcoming meeting next week. However, they believe that the Committee’s post-meeting communications will provide further insights into the potential direction of policy adjustments later in the year.
Median dot for 2024 will remain unchanged at 4.625%
We anticipate that the Federal Open Market Committee (FOMC) will maintain the federal funds rate and its current pace of balance sheet runoff during its forthcoming meeting on March 19-20.
However, we have adjusted our forecast, now predicting that the FOMC will enact the first federal funds rate cut during its June 12 meeting. Initially, we had expected this adjustment to occur at the May 1 meeting. We project a total easing of 100 basis points throughout this year, with an additional 100 basis points of easing expected throughout 2025, ultimately setting the fed funds target range to 3.25%-3.50% by the end of 2025.
Our current outlook suggests that the median dot for 2024 will remain steady at 4.625%, yet there is a bias towards a higher median, given the previous distribution of dots and recent inflation data. Likewise, we anticipate no changes to the 2025 and 2026 median dots, although we believe the risks lean towards the upside in these cases as well.
While our base scenario anticipates the FOMC announcing a plan to decelerate the pace of Quantitative Tightening (QT) during its June meeting, we acknowledge the possibility of this adjustment occurring one meeting earlier or later.
