Fed’s policy statement adopts obvious hawkish language

the US central bank’s policy statement, following FOMC meeting in September, adopts obvious hawkish language. The Fed said that the economic activity continued to expand at a solid pace and noted that job gains have slowed but remain strong. Moreover, the US central bank reiterated inflation remains elevated and that they are highly attentive to inflation risks.

The US Dollar gathered strength against its rivals with the immediate reaction to the Fed rate decision and the revised dot plot. At the time of press, the US Dollar Index was virtually unchanged on the day at 105.15.

The revised Summary of Economic Projections (SEP) – the so-called dot plot – revealed that policymakers forecast one more 25 basis points rate increase before the end of the year.

Along with the usual statement, the Fed also released the revised Summary of Economic Projections (SEP), the so-called dot plot, and FOMC Chairman Jerome Powell will comment on the policy decisions and economic outlook in the post-meeting press conference.

Fed Statements Key Takeaways

Fed officials’ median view of fed funds rate at end-2025 3.9% (prev 3.4%). Fed officials’ median view of fed funds rate at end-2024 5.1% (prev 4.6%).

Fed officials’ median view of fed funds rate at end-2026 2.9%.

Fed officials’ median view of fed funds rate in longer run 2.5% (prev 2.5%).

Fed projections imply one more 25-basis-point rate hike this year and 50 bps of rate cuts in 2024, versus 100 bps of 2024 cuts in june projections.

Fed policymakers see much higher GDP growth of 2.1% in 2023, a lower unemployment rate and more progress on core inflation than they saw in June.