On the September FOMC: Dotsaster

An expected 75 bp hike and no statement changes. But the Summary of Economic Projections strongly steepened and lengthened the policy path, now implying a 75 bp hike in November, a 50% probability of another one in December, and a higher funds rate at year-end 2023 than at year-end 2022. Estimates of the unemployment rate were commensurately raised, with Powell calling the prospect of 1.25 million job losses “relatively modest.” This happened against the backdrop of broadly falling inflation levels since the prior SEP in June. After the meeting and during the press conference, the futures-implied policy path was only modestly upgraded, suggesting the market’s strong skepticism that the Fed will actually carry out its mad scheme.