Expect More Policy Tightening
My response to the March 2018 Federal Open Market Committee decisions
“While there is no change to the Fed’s end 2018 interest rate projection, this is clearly a firming up of the future trajectory of policy tightening. The projected end-2020 Fed Funds rate is now a full 50 bps higher than in last September’s projections, at 3.4%. The Fed seems to be gaining confidence in the normalisation process as they see the labour market tightening quite a bit further than they previously predicted. The fact that the Fed have acknowledged some slight softening in recent demand side indicators while upgrading their 2017 growth forecasts underlines the impact of the easing in fiscal policy on the near-term GDP outlook”.