U.S. Desk Strategy Market Views

Dovish leaning presser, upbeat economic forecasts and keeping 3 cuts in 2024

Overall, the March FOMC event came in largely as we expected. The 2024 dots were unchanged (suggesting 3 cuts) and the bar to cut rates further than what is in their forecast was lowered as chair Powell continues to shift focus towards the labor market as the rationale to cut further if conditions weaken.

Although we did not get the official QT-tapering announcement, given Powell’s presser comments, it seems like an announcement will come “fairly soon”. In our view, QT-taper likely launches at the May meeting. As a result, we now expect the first cut to start either in June or July (data depending).

Please see the attached PDF for the full write-up with the updated dot plot comparison table…