AFMC - Three Two One - When?
2024-06-25 15:00:00 ET
Summary
- The economy clearly has slowed since the fourth quarter of 2023. Real GDP growth was only 1.3% in the first quarter of 2024, down from 3.4% in Q4 2023.
- Despite the slowing economy and lack of signs of a recession, the inflation story has clearly turned mixed in 2024 after a significant decline during 2023.
- Given the pattern of inflation we have had so far, it seems that there is no chance for a rate move at the FOMC’s next meeting at the end of July, and we won’t get a new set of SEPs until September.
By Robert Eisenbeis, Ph.D.
Going into January 2024, the FOMC’s December Summary of Economic Projections (SEPs) had three rate cuts penciled in for 2024, and that projection was confirmed in the March SEPs. In the intervening period between that meeting and the FOMC’s June meeting, a number of developments in terms of incoming data caused the FOMC to reassess the likely policy path through the rest of the year, and it scaled back its expected rate cuts to only one in 2024. Moreover, during the post-meeting press conference, Chairman Powell would not offer an opinion on when that cut might come, if it did, and argued that timing would depend upon incoming data. So, what information might have caused the FOMC to reassess its policy path?...
Three, Two, One - When?