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Fed: Running policy on the tighter side of neutral - Westpac

Richard Franulovich, Head of FX Strategy at Westpac, explains that the FOMC minutes underscore a growing groundswell in favour of running policy on the tighter side of neutral.

Key Quotes

“While the minutes note a “few” lean toward “modestly restrictive” policy, the dot plot shows a lot more than that - 13 of 16 dots put Fed Funds above neutral by end-2020 (median 3.375% vs r* at 3.00%), an overwhelming majority. Against that, rates markets project Fed Funds will remain below neutral by end-2020, albeit not by much, at 2.90%.”

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