FOMC rate decision is the major focus today and Fed is widely expected to keep the fed funds rates unchanged at 1.50-1.75%. Fed officials have repeatedly noted that policy is in the right place for now. There won’t be any further adjustments unless there are material changes in the economic outlook. We’d expect Fed’s statement to reflect such message again.
Attentions would, therefore, be mainly on the new economic projections, in particular, federal funds rate projections. As in September’s meeting, median rate projections were at 1.9% in 2019 and 1.9% in 2020, before rising to 2.1% in 2021 and 2.4% in 2022. Current rates are already below these levels and thus, downside revisions should naturally be seen. Fed is unlikely to revise down 2020 projections to an extent that reflects another rate cut. Thus, the main market moving part would on the how fast Fed officials expect rates to climb back in 2021 and 2022.
Here are some suggested previews:
BoJ Kuroda: Global economy relatively bright next year
BoJ Governor Haruhiko Kuroda said together that the “overall global economy is expected to be relatively bright next year”. He noted that economies in US and China are firm. Global economy will also pick up. Additionally, BoJ would need to pay close attention to climate change.
Meanwhile, Kuroda also said BoJ stands ready to step up stimulus if needed. But it’s also mindful of rising costs of prolonged easing. He urged financial institutions to diversify operations, cut costs and consider consolidating businesses.
BoJ said “the domestic and external environment surrounding financial institutions is changing rapidly. The industry is entering an age of reform aimed at rebuilding its business model into a more sustainable one”.