Technical Analysis

What to expect from the FOMC next week? – BofA

Bank of America Global Research discusses its expectations for next week’s FOMC policy meeting.

We expect the Fed to raise its target range for the federal funds rate by 50bp in December to 4.25-4.5%. Fed
communications over the last few weeks have clearly telegraphed this
move. The more important question is where the Fed goes next,” BofA

Dots to shift higher again: We
expect the median forecast for 2023 to move up by 50bp to 5.125%,
consistent with our terminal rate. We think the dot plot will then point
to 100bp of cuts each in 2024 and 2025. The macro projections in the
SEP should be revised to show lower GDP growth and inflation than in
September, and higher unemployment.

Press conference: no pivot. We
expect Chair Powell to push back against easing in financial conditions
and remind investors that a slower pace of hikes does not mean a lower
terminal rate, and the Fed’s job is far from done,” BofA adds.

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