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Macro Insights

Flash Macro: U.S. FOMC

  • 2 minute read
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The March FOMC statement and dot-plot, as well as Chair Powell’s comments, support our base case that the Fed initiates gradual cuts in 2H24 in response to cooler inflation and easing labor market conditions. At the same time, we see signs that the FOMC is adjusting to the reality that achieving two percent inflation will be really difficult this cycle. We continue to think that we have permanently exited the low-growth, low-inflation, low-rate environment of 2010-2019.

Despite Stronger Growth and a Fast Start to the Year for Inflation, the Fed Has Not Changed Its Plan to Cut Rates in 2H24

Bar chart showing Federal Reserve Board projections for Gross Domestic Product, Personal Consumption Expenditures, and the Fed Funds Rate as of March 20, 2024.
Data as of March 20, 2024. Source: Federal Reserve Board
Bar chart showing Federal Reserve Board projections for Gross Domestic Product, Personal Consumption Expenditures, and the Fed Funds Rate as of March 20, 2024.
Data as of March 20, 2024. Source: Federal Reserve Board

Importantly, the implications of this acknowledgement cut both ways, including higher resting rates for both nominal GDP and interest rates. Consistent with this view, this new normal has material implications for asset allocation (hence, why we have been calling this cycle a Regime Change).

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