{"id":8296,"date":"2024-06-13T09:31:52","date_gmt":"2024-06-13T08:31:52","guid":{"rendered":"https:\/\/hamiltoncourtfx.com\/?p=8195"},"modified":"2024-06-13T09:31:52","modified_gmt":"2024-06-13T08:31:52","slug":"fed-issue-forward-guidance-as-policy-makers-hold-rates","status":"publish","type":"post","link":"https:\/\/hamiltoncourtfx.com\/es\/fed-issue-forward-guidance-as-policy-makers-hold-rates\/","title":{"rendered":"Fed Issue Forward Guidance as Policy Makers Hold Rates"},"content":{"rendered":"
\n
\n
\n
\n
Thought for Thursday<\/strong><\/h5>\n
\u201cTomorrow belongs to those who can hear it coming.\u201d – David Bowie<\/h5>\n<\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n\n
\n
\n
\n
\n

Fed Issue Forward Guidance as Policy Makers Hold Rates<\/h2>\n <\/div>\n
\n

Last night the Federal Reserve met market expectations in maintaining their benchmark policy target rate of 5.25-5.5% – its highest level in 23 years. This marked the seventh consecutive hold as policy makers signalled that there was more work to do in bringing inflation down to 2%.<\/p>\n

With inflation remaining \u201celevated\u201d, the statement signalled that the \u201cCommittee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.\u201d<\/p>\n

As markets looked towards forward guidance, the release of the Fed\u2019s dot plot indicated that policy makers were forecasting just one cut this year \u2013 down from the three cuts projected during their March meeting.<\/p>\n

Given that at the start of the year markets were pointing towards six rate cuts over 2024, yesterday evening served as a further reminder that the Fed\u2019s battle to bring inflation down has been a protracted one.<\/p>\n

Looking further ahead, the dot plot indicated that the FOMC are projecting four 25bps cuts over 2025 with policy makers anticipating the PCE index \u2013 the Fed\u2019s preferred gauge of inflation \u2013 to be 20bps higher than March\u2019s projection of 2.4% over the course of next year.<\/p>\n

As anticipation grows that the medium-term level of inflation will remain marginally higher than previously forecasted, median estimates for the fed-funds rate target range by the end of next year was upwardly revised 25bps, to a 4% to 4.25% target.<\/p>\n

While this raises questions over whether the natural rate will shift higher, the median dot for end of 2026 was unmoved at 3% to 3.25%.<\/p>\n

With the release of yesterday\u2019s Dot Plot, attention now turns to the Bank of England\u2019s Monetary Policy Committee next Thursday. While the consensus is projecting a hold, markets are similarly looking for further forward guidance from policy makers.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

\n
\n
\n
\n

US Inflation Eases<\/h2>\n <\/div>\n
\n

Ahead of yesterday\u2019s interest rate decision, US inflation showed signs of cooling greater than expected. Here, US CPI eased to its lowest level since February, coming in at 3.3% on an annualised basis against market expectations of 3.5%.<\/p>\n

While energy price rises showed no signs of letting up, inflation eased in food, shelter, and transportation.<\/p>\n

On a monthly basis, CPI came in flat at 0%, falling 30bps from last month\u2019s print and similarly coming in softer than the consensus.<\/p>\n

When stripping out the volatile components of food and energy, core inflation eased to 3.4% (annualised), marking the lowest rate since April 2023.<\/p>\n

The softening of inflation was enough for some dovish commentators to speculate on whether the Fed would cut three times by the end of the year, though the release of the dot plot shortly afterwards seemed enough to quell such thoughts.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n

\n
\n
\n
\n

Today<\/h2>\n <\/div>\n
\n

Following the release of Australian unemployment data \u2013 which came in unchanged at 4% – earlier this morning, attention today will turn to initial jobless claims from the US at 1330 alongside the simultaneous release of US PPI.<\/p>\n

In the UK, today will see the Labour Party release their manifesto as the General Election now falls just three weeks away today.<\/p>\n <\/div>\n <\/div>\n <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"

Thought for Thursday, benchmark policy target rate maintained by the Fed, signs of more easing than expected for US inflation, and today’s events.<\/p>","protected":false},"author":15,"featured_media":1483,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"rp-language":[16],"class_list":["post-8296","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-morning-updates","rp-language-en_gb"],"_links":{"self":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/8296","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/comments?post=8296"}],"version-history":[{"count":0,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/posts\/8296\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media\/1483"}],"wp:attachment":[{"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/media?parent=8296"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/categories?post=8296"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/tags?post=8296"},{"taxonomy":"rp-language","embeddable":true,"href":"https:\/\/hamiltoncourtfx.com\/es\/wp-json\/wp\/v2\/rp-language?post=8296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}