by Calculated Danger on 11/19/2024 03:53:00 PM
From housing economist Tom Lawler:
Based on CME FedWatch, the “market-based” chance that the FOMC will minimize its federal funds price goal by 25 bp at its December assembly is about 59%. People may also play shut consideration to the discharge of the FOMC’s Abstract of Financial Projections (SEP) from assembly members. Beneath 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 development for 2024 will in all probability be important greater than the median projection (and close to the highest of the forecast vary), the unemployment price will possible be considerably under the median projection, and core PCE inflation will possible be greater than the median projection.
With development considerably greater and inflation considerably greater than projected in September by most assembly members within the second half of this 12 months (and development was a LOT greater than projected by some assembly members), one would possibly count on that (1) the projected path of the federal funds price over the following 12 months will suggest fewer price 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 price for the federal funds price for December 2024 by 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 have been nearly 100 bp greater than was the case on September 18, and have been about 25 bp decrease than was the case on June 12.
