Fed Wrap – Uncertainty Clouds Forecasts for a Patient Fed

Ryan Weldon, from IFM’s Debt Investments team in New York, features in our Fed Wrap market update videos discussing central bank themes in debt markets, with a particular focus on the US Federal Reserve (Fed).

In this edition, Ryan discusses the outcomes of the March Fed meeting, the updated dot plot and summary of economic projections, and how the Fed will position itself amidst the current uncertain environment.

At the March meeting, the Federal Reserve held rates, maintaining the upper band of their policy rate at 4.5%.  There were minimal changes to the statement with the Fed removing language around the balance of risks to being able to achieve their dual mandate and adding language around the uncertainty of their economic outlook.  The uncertainty was echoed in the updated summary of economic projections which showed the Fed’s median expectation for GDP in 2025 decreased by 0.4 percent to 1.7 percent.  Additionally, the Fed increased their median expectations for core PCE by 0.3 percent to 2.8 percent.  The median expectations in the dot plot remained the same with the Fed expecting 2 cuts through 2025, however, the net shift in the spread of the dots was downward which was a slightly dovish surprise.