Dollar rebounds after Fed’s rate hike, in particular against Aussie Yen also strengthens together against Euro and Swiss Franc. Meanwhile, Stock pares back some initial gains. The driving force for Dollar’s rebound is to be investigated. But overall, Fed’s new projections are quite dovish. (Yet, a possible reason might be….. Fed is not stopping after today’s hike yet).

First and most important on longer run federal funds rate, seen as Fed’s view on neutral:

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  • Median – revised to 2.8%, down from 3.0%
  • Central tendency – revised to 2.5-3.0%, somewhat down from 2.8-3.0%
  • Range – unchanged at 2.5-3.5%

For 2019

  • Median – revised to 2.9%, down from 3.1%
  • Central tendency – revised to 2.6-3.1%, down from 2.9-3.4%

Overall, the revision argues that Fed might have one or at most two more rate hikes in 2019, rather than three as implied in September projections.

On growth:

  • 2019 median growth projection was revised to 2.3%, down from 2.5%
  • 2020 median growth projection was unchanged at 2.0%

On unemployment:

  • 2019 median unemployment rate projection was unchanged at 3.5%
  • 2020 median unemployment rate projection was revised to 3.6%, up from 3.5%

On core inflation:

  • 2019 median core PCE projection was revised to 2.0%, down from 2.1%
  • 2020 median core PCE projection was revised to 2.0%, down from 2.1%

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