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“We expect the FOMC decision on 20 March to leave the current policy rate unchanged, move the median policy rate forecast for 2019 to one hike (from two), maintain 2020 at one hike and discuss the end to the balance-sheet taper in a separate communication or at the press conference,” notes Standard Chartered economist Sonia Meskin.

Key quotes

“We believe the distribution around the median projected policy rate (‘dot plot’) in the Summary of Economic Projections (SEP) will be important. A tighter distribution around the median would be a dovish signal to the markets (see How the Fed can surprise investors).”

“We also expect a modest downgrade to the GDP projections in 2019, unchanged inflation projections, and a modest downgrade to estimates of neutral policy rate and the non-accelerating inflation rate of unemployment (NAIRU). The median long-run potential growth rate estimate could decline as well.”

“Fundamentally, we believe the Committee’s focus has partly shifted to ways to support growth in the next downturn. While the number of hikes remaining in this cycle matters for the markets, the Committee appears less focused on the precise level at which rates stand once the US economy enters the downturn than on other potential policy tools it may deploy then.”