- As widely expected the Fed kept rates stable and did not make any substantial changes to the economic outlook.
- The dots signaled a strong preference for stable rates in 2020 with only four FOMC members now seeing a hike.
- Chair Powell reiterated the Fed’s concern for stubbornly low inflation and reckoned that labor market slack is larger than expected. This will be conductive to a review of the policy rule, which will likely lead a downward revision of the expected policy rate path in the coming meetings.
- Given our less upbeat 2020 growth forecast (1.6% versus the 2% penciled in by the Fed) and the slide in expected inflation we stick to our forecast of another rate cut in the first half of 2020.