Federal Reserve: Policy path reshaped – Rabobank
Rabobank’s RaboResearch Global Economics & Markets team reviews the latest FOMC decision, noting a unanimous 25 bps hike in the federal funds rate. The Committee’s projections point to one more hike this year, then a prolonged hold through 2027, with the first cut in 2028.
Rabobank's RaboResearch team evaluates the Federal Open Market Committee's latest decision, which included a 25 basis point increase in the federal funds rate. The Committee anticipates further hikes this year, with a prolonged hold through 2027, followed by a rate cut in 2028. The report outlines a higher neutral rate, a steeper policy path, and the Fed's commitment to preserving its monetary policy independence under Chair Jerome H. Warsh.
The unanimous 12-0 decision marked the first rate hike since July 2023, signaling a new reaction function with a higher policy rate trajectory needed for similar inflation outcomes. The Fed's projections indicate the policy rate will surpass levels from Chair Warsh's tenure by the end of President Trump's term.
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