ABN Amro with thier preview of the Federal Open Market Committee (FOMC) meeting, Wednesday, 21 September 2022.

  • Forecasting a 75bp rate hike today

In summary:

  • While market expectations for a 100bp move initially received a boost following the strong August inflation print, those expectations have since been pared back, and as a result we think it is unlikely the Fed will opt for a 100bp hike at this meeting (the Committee has been in its blackout period in the meantime, with no guidance therefore on how the Fed interpreted the inflation data).
  • Alongside the decision on rates, the Fed will also release updated FOMC projections for the economy and interest rates. Compared to the last update in June, we expect Committee members to lower their growth forecasts, raise inflation forecasts, and raise projections for the fed funds rate.
  • Indeed, for the first time in this hiking cycle we think the Committee is likely to raise its projection for the fed funds rate to levels beyond our own forecast – 4% in the upper bound – likely to the c.4.5% range. The projections are also likely to suggest that monetary policy will remain restrictive through 2023 and into 2024, as the Fed seeks to assure markets and the public that it is determined to bring inflation durably back to its 2% target.


Earlier previews:

FOMC forecast, +75bp hike but high inflation means +100bp is a risk

Federal reserve building