FOMC Preview

December 18, 2024

The Federal Open Market Committee last met right after the U.S. election that is returning Donald Trump to the White House with a majority in both houses of Congress and the Supreme Court and with a revolutionary policy agenda that among other things may lift inflation near term. At the November press conference after a cut of 25 basis points, Chairman Powell depicted both the U.S. economy and monetary policy at the time being in a very good place. Listeners came away with the expectation that a third Fed cut in December was likely following ones of 50 basis points in September and November to total a full percentage point from peak.

Fed macroeconomic forecasts and a new dot-plot diagram of individual interest rate preferences will be updated at this meeting. The market rate change consensus is still a 25-bp cut, although the certainty of that view is now weaker than it was most of the time during the past six weeks. The Fed prides itself on avoiding policy surprises, and rarely has there been a meeting lately when the Fed did not do what market participants believed was the right move to make. This time, however, quite a few folks believe there will be a cut but also believe that a pause would be a better decision. Even if a cut is done, markets are braced for hearing forward guidance that may point to a smaller drop in rates than previously was expected during 2025. It will be interesting too, to see if Powell repeats his view from November that Fed officials do not want to see an extension of labor market weakness beyond what already has happened.

Net financial market movements since November 7th have been limited in scope. What most sticks out is a dollar rise of about 3% against the euro and, of course, the 40% upsurge in the price of Bitcoin.

	EUR/$	$/JPY	10Y, %	DJIA	Oil, $
06/30/04	1.2173	109.44	4.63	10396	37.95
06/30/05	1.2090	110.89	3.96	10370	57.00
06/29/06	1.2527	116.07	5.20	11077	73.41
06/28/07	1.3452	123.17	5.10	13456	69.82
08/07/07	1.3749	118.55	4.73	13510	72.27
09/18/07	1.3888	115.75	4.51	13475	81.42
10/31/07	1.4458	115.28	4.42	13873	93.59
12/11/07	1.4682	111.49	4.11	13645	89.78
01/30/08	1.4792	107.31	3.70	12454	91.70
03/18/08	1.5786	98.73	3.41	12257	107.53
04/30/08	1.5562	104.58	3.83	12953	111.54
06/25/08	1.5568	108.37	4.18	11837	133.62
08/05/08	1.5445	108.42	3.97	11484	119.82
09/16/08	1.4144	105.16	3.36	10936	91.18
10/08/08	1.3625	99.87	3.50	9447	87.02
10/29/08	1.2933	97.15	3.81	9145	67.38
12/16/08	1.3790	90.14	2.52	8687	44.14
01/28/09	1.3253	90.01	2.61	8356	42.92
03/18/09	1.3115	98.13	2.94	7340	47.73
04/29/09	1.3331	97.06	3.02	8194	51.05
06/24/09	1.3984	95.43	3.59	8373	68.76
08/12/09	1.4221	96.17	3.71	9366	70.64
09/23/09	1.4779	91.50	3.50	9859	69.13
11/04/09	1.4884	90.75	3.51	9896	80.66
12/16/09	1.4542	89.78	3.56	10478	73.14
01/27/10	1.4045	89.49	3.61	10148	73.31
03/16/10	1.3756	90.64	3.67	10645	81.45
04/28/10	1.3157	94.10	3.75	11043	82.57
06/23/10	1.2284	90.12	3.13	10307	76.50
08/10/10	1.3107	85.85	2.81	10605	79.94
09/21/10	1.3132	85.21	2.66	10747	73.05
11/03/10	1.4059	81.35	2.53	11174	84.59
12/14/10	1.3423	83.37	3.38	11497	88.47
01/26/11	1.3658	82.55	3.41	12001	87.36
03/15/11	1.3969	81.04	3.29	11815	98.09
04/27/11	1.4665	82.63	3.36	12612	112.48
06/22/11	1.4392	80.12	2.97	12175	94.87
08/09/11	1.4234	77.09	2.36	10993	81.76
09/21/11	1.3778	76.34	1.93	11377	86.74
11/02/11	1.3724	78.11	2.03	11805	92.77
12/13/11	1.3067	77.92	1.98	12130	100.20
01/25/12	1.3027	77.96	1.97	12670	98.85
03/13/12	1.3096	82.76	2.08	13044	106.34
04/25/12	1.3226	81.37	1.97	13096	104.13
06/20/12	1.2693	79.28	1.66	12837	83.63
08/01/12	1.2300	78.10	1.49	13028	88.98
09/13/12	1.2895	77.43	1.72	13342	97.60
10/24/12	1.2948	79.75	1.77	13115	85.72
12/12/12	1.3082	83.24	1.70	13325	87.13
01/30/13	1.3584	91.16	2.02	13949	97.63
03/20/13	1.2948	95.65	1.94	14497	92.82
05/01/13	1.3195	97.48	1.62	14740	90.47
06/19/13	1.3364	95.76	2.23	15304	98.38
07/31/13	1.3301	97.92	2.67	15565	105.63
09/18/13	1.3363	98.28	2.76	15606	107.01
10/30/13	1.3764	98.18	2.48	15660	97.42
12/18/13	1.3696	103.81	2.89	16198	98.06
01/29/14	1.3651	102.13	2.73	15719	97.23
03/19/14	1.3918	101.75	2.71	16335	99.96
04/30/14	1.3868	102.11	2.66	16553	99.52
06/18/14	1.3584	101.93	2.61	16892	106.12
07/30/14	1.3372	102.84	2.51	16878	101.45
08/17/14	1.2961	107.60	2.57	17151	94.05
10/29/14	1.2677	108.40	2.33	16956	82.51
12/17/14	1.2409	117.58	2.11	17201	57.85
01/28/15	1.1337	117.77	1.78	17457	44.75
03/18/15	1.0637	120.98	2.05	17733	42.49
04/29/15	1.1164	118.67	2.05	18039	59.16
06/17/15	1.1255	124.22	2.39	17862	59.12
07/29/15	1.1073	123.61	2.29	17720	49.17
09/17/15 10/28/15	1.1334 1.1081	120.86 120.50	2.26 2.07	16778 17687	47.01 45.83
12/16/15 01/27/16 03/16/16 04/27/16 06/14/16 07/27/16 09/21/16 11/02/16 12/14/16 02/01/17 03/15/17 05/03/17 06/14/17 07/25/17 09/20/17 11/01/17 12/13/17 01/31/18 03/21/18 05/02/18 06/13/18 08/01/18 09/26/18 11/08/18 12/19/18 01/30/19 03/20/19 05/01/19 06/19/19 07/31/19 09/18/19 10/30/19 12/11/19 01/29/20 03/03/20 03/15/20 03/23/20 04/29/20 06/10/20 07/29/20 09/16/20 11/05/20 12/16/20 01/27/21 03/17/21 04/28/21 06/16/21 07/28/21 09/22/21 11/03/21 12/15/21 01/26/22 03/16/22 05/04/22 06/15/22 07/27/22 09/21/22 11/02/22 12/14/22 02/01/23 03/22/23 05/03/23 06/14/23 07/26/23 09/20/23 11/01/23 12/13/23 01/31/24 03/20/24 05/01/24 06/12/24 07/31/24 09/18/24 11/07/24 12/18/24	1.0956 1.0874 1.1089 1.1339 1.1205 1.0998 1.1160 1.1099 1.0641 1.0741 1.0638 1.0910 1.1149 1.1735 1.2010 1.1631 1.1815 1.2424 1.2271 1.1963 1.1788 1.1668 1.1765 1.1400 1.1420 1.1415 1.1355 1.1244 1.1217 1.1132 1.1066 1.1117 1.1112 1.1002 1.1179 1.1087 1.0697 1.0859 1.1367 1.1787 1.1824 1.1814 1.2174 1.2115 1.1908 1.2071 1.2126 1.1812 1.1722 1.1581 1.1255 1.1287 1.0983 1.0536 1.0438 1.0129 0.9884 0.9884 1.o686 1.0988 1.0792 1.1047 1.0860 1.1065 1.0672 1.0563 1.0875 1.0840 1.0855 1.0681 1.0830 1.0814 1.1126 1.0801 1.0479	121.72 118.48 113.70 111.37 106.15 105.65 100.84 103.33 115.37 113.52 114.48 112.47 111.55 111.17 111.34 113.91 112.58 109.31 106.27 109.91 110.38 111.69 112.94 113.88 112.26 109.55 111.42 111.17 108.36 108.59 108.16 108.89 108.62 109.14 107.21 108.33 111.26 106.73 107.24 104.84 105.00 103.68 103.65 104.07 109.27 108.80 109.97 110.09 109.23 114.01 113.98 114.36 118.62 130.10 133.82 137.31 144.08 146.93 134.86 128.93 132.57 135.22 139.38 140.82 148.06 150.87 142.93 146.58 151.60 157.68 155.93 150.89 141.97 152.94 153.75	2.29 2.02 1.99 1.89 1.62 1.53 1.70 1.78 2.45 2.49 2.57 2.30 2.13 2.29 2.24 2.35 2.34 2.73 2.89 2.97 2.96 2.99 3.08 3.23 2.81 2.72 2.57 2.48 2.08 2.02 1.75 1.80 1.80 1.61 1.01 1.01 0.81 0.61 0.77 0.59 0.67 0.77 0.91 1.01 1.66 1.62 1.49 1.25 1.31 1.56 1.45 1.78 2.19 2.98 3.34 2.77 3.56 4.03 3.51 3.41 3.54 3.37 3.79 3.89 4.35 4.79 4.02 3.97 4.28 4.66 4.27 4.11 3.68 4.34 4.38	17583 16002 17217 18013 17675 18461 18151 17989 19915 19890 20885 20920 21375 21711 22376 23405 24585 26259 24839 24095 25309 25310 26543 26195 23881 24841 25727 26624 26452 27210 27048 27067 27877 28833 25917 23185 18592 24667 27169 26467 28196 28418 30,125 30,554 32,868 33,908 34,251 34,938 34,279 35,894 35,493 34,594 33,726 33,242 30,806 31,846 30,850 32,524 34,175 34,093 32,466 33,689 34,108 35,418 34,553 33,226 37,090 38,380 39,144 37,888 38,772 40,995 41,634 43,703 43,583	35.95 30.85 37.79 44.89 48.29 41.91 43.44 45.18 51.83 53.33 48.43 47.96 44.71 48.75 50.55 54.24 56.60 64.41 65.00 67.57 66.77 67.62 71.68 60.93 47.80 54.51 59.48 63.38 53.65 58.48 58.16 54.60 58.68 53.52 47.18 31.73 23.36 15.30 39.05 41.22 40.00 38.84 47.77 52.81 64.30 63.70 72.32 74.25 71.94 81.14 70.39 87.40 95.70 107.71 116.24 97.36 83.70 88.57 77.56 76.80 70.32 68.70 69.38 78.93 90.28 82.86 69.77 75.92 81.70 80.52 78.79 77.74 70.65 72.76 70.90

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This entry was posted on Wednesday, December 18th, 2024 at 12:18 pm and is filed under Central Bank Watch. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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