Wall Street Banks' Expectations on Fed Policy Decisions

Deep News12-09 23:11

1. **Morgan Stanley**: - Currently expects the Fed to cut rates in December, January, and April, with the terminal rate falling to 3.0%-3.25%. - The statement will signal the end of "risk-management-driven rate cuts." - Anticipates multiple dissenting votes among policymakers. - No major changes expected in the "dot plot."

2. **JPMorgan**: - Also predicts a "hawkish cut." - The statement will suggest fewer future rate cuts. - Dot plot projections: 2026 rate at 3.4%, 2027 at 3.1%, with long-term rates potentially higher. - Next move: One final cut in January.

3. **Bank of America**: - Forecasts a 25-basis-point rate cut alongside balance sheet adjustments. - The statement will raise the bar for further easing (making additional cuts harder to trigger). - Expects around three dissenting votes. - Next cut timing: June and July.

4. **Deutsche Bank**: - Strong growth and sticky inflation warrant caution on further cuts. - The statement will shift toward a more hawkish stance. - Dot plot aligns with 2026 (3.4%) and 2028 (3.1%) rate projections. - Next cut timing: September.

5. **UBS**: - Believes most policymakers will support a 25-basis-point cut. - The statement may adopt a "balanced risks" tone, though this is not the baseline expectation. - Expects at least two dissents, likely from Musalem and Schmid. - Inflation forecasts to be slightly revised down; dot plot near September levels. - Powell may emphasize "data dependence" and "policy nearing neutral."

6. **Commerzbank**: - Projects a 25-basis-point cut but with potential multiple dissents. - Powell may pair the cut with hawkish signals. - Only one more cut expected before his term ends; further easing under a new chair starting June.

7. **Goldman Sachs**: - Supports cuts due to labor market softening. - The statement may stress "higher threshold for future cuts." - Revisions: GDP outlook raised, inflation slightly lowered.

8. **Citi**: - Predicts a "hawkish cut." - Minimal changes to the dot plot. - Powell won’t rule out January or March cuts but will avoid dovish signals.

9. **Wells Fargo**: - Expects the Fed to continue moving toward a "more neutral policy stance." - Dot plot: 2026 at 3.4%, 2027-2028 at 3.1%, long-term at 3.0%. - Statement may see 3-4 dissents; policy guidance to turn moderate. - Outlook: Two 25-basis-point cuts in Q1 and Q2.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment