FOMC: Outlook has shifted downwards - BBVA

At the last meeting, the Federal Reserve is expected to raise rates for the fourth in 2018, time this year. The Research Department at BBVA, see the Fed rising rates on Wednesday and also two times next year. 

Key Quotes: 

“Solid growth fundamentals, a healthy labor market, stable inflation near its target and low levels of financial stress gave the committee all the support it need to increase rates throughout the first three quarters of the year.”

“Now the Fed is trying to calibrate the remaining stretch of its normalization path in order to ensure a softlanding amidst an uptick in market volatility and growing concerns about financial stability.”

“Given that the risk balance is tilting to the downside, our outlook for the Fed has also shifted downwards. The FOMC forecasts (Dot plot) will reflect these same concerns, suggesting a slight downshift in the median projected path of the benchmark rate.”

“We still expect the committee consensus to edge closer to two rate hikes next year, as opposed to the three implied by September’s projections.”

“This shift in the pace of normalization will be aided by the change in post-meeting communication, which will now occur after all eight of next year’s meetings.”