Highlights of the FOMC decision on December 11, 2019:
- At the prior decision on October 30, the Fed cut rates 25 bps
- The market has priced in virtually no chance of rate move through February
- IOER 1.55% vs 1.55% prior
- Fed drops language about ‘uncertainties about this outlook remain’
- Vote was unanimous
- “The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate”
- No changes in the economic outlook paragraph
- Says “the current stance of monetary policy is appropriate”
- Leaves forecasts for GDP and inflation unchanged, lowers unemployment
- Median forecast is for one rate hike in 2021 and one in 2022
Dropping the language about uncertainties is moderately hawkish. However the market is basically unmoved in the aftermath. The Fed is clearly signaling that it’s on the sidelines here.