New FOMC dot plot shows slim majority now expects a 2024 rate cut, reversing prior dovish bias and strengthening the USD.
Markets reacted sharply to the Federal Reserve’s updated dot plot, which signaled a higher likelihood of a rate cut this year. The shift removed the dovish bias of the prior statement, aligning with Chair Kevin Warsh’s pledge to avoid forward guidance.
The new projections showed a slim majority of officials now anticipate a cut in 2024, with a steeper path for rates in 2025 and 2026. The S&P 500 fell 36 points to 7476, while gold dropped $44 after briefly trading up $30 pre-FOMC.
US 2-year yields rose 8.6 bps to 4.13%, and the EUR/USD pair declined 60 pips to 1.1545 as the USD strengthened broadly. Warsh’s first press conference is scheduled shortly.