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MarketScape · 12.14.23

Transitioning Carefully

The Fed’s latest policy statement seems to suggest they are carefully transitioning from the question of when to stop raising rates to when to start cutting them, with an eye on inflation and growth.
  • Markets & Economy
  • Liquidity
  • Central Banks
  • Monetary Policy
Head of Global Macro, Global Fixed Income
Key Points
What it is
We examine the Federal Reserve’s December statement, and their comments afterward, about keeping the target range for the federal funds rate unchanged.
Why it matters
The Fed’s main message seems to be they are carefully transitioning from the question of when to stop raising rates to when to start cutting them.
Where it's going
We think the Fed will proceed more carefully in this transition than the market currently anticipates, keeping an eye on inflation and growth.
Main Point

Keeping an Eye on the Data

Fed Chair Jerome Powell suggested that they “need to see more progress” on the inflation front. He also noted that, if above-trend GDP growth persists, “that could mean we need to keep rates higher for longer” or even “hike again.” So, inflation and growth indicators remain the key data to watch.

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Antulio N. Bomfim

Head of Global Macro – Global Fixed Income

Antulio Bomfim, head of global macro for the global fixed income team, oversees interest rate strategy, systematic volatility, liquidity and monitoring of systemic risk globally. He is also responsible for the firm’s global liquidity management business.

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