The FED hiked from 0.25% to 0.50% although, the main takeaway from the Fed decision was 7 hikes in the dot plot for this year versus about 5 that most economists were flagging. That led to a push higher in front-end rates initially and a 60% implied probability of a 50 bps hike in May at the next meeting.

But the USD started turning lower as Powell started to speak. I can’t tie that move to anything he said. Perhaps there were some looking for a clear nod to 50 bps or a faster pace of hikes but I find that thinking to be a stretch. More likely is that it was a reversion to the earlier theme and reveals that dip buyers have been waiting for the FED risk to pass. We’ve seen that before but it will take through the week to sort out whether it’s real or a temporary blip.

For March 2022, it shows the median rate at the end of 2022 at 1.9% vs 0.9% in December. That means seven hikes in 2022 which is congruent with the market but above expectations from the Fed. In 2023 the expectations are for 2.8% vs 1.6% median (and 11 of 18 at 1.9%) in December.. They also see 2.8% in 2024.

Dot plotFOMC dot plot from March 2022

The Dot Plot in December showed:

Dot plotThe Dot Plot from December 2021

The table of the central tendencies from March 2022 now shows:

Central tendencies
Central trends from March 2022 meeting

Summary of central tendencies from March compared to December now shows for 2022:

  • GDP lowered to 2.5% to 3.0% from 3.6% to 4.5% in 2022
  • Unemployment rate near change near unchanged at 3.4% to 3.6% from 3.4% to 3.7% in 2022
  • PCE inflation much higher at 4.1% to 4.7% from 2.2% to 3.0% in 2022
  • Core PCE inflation much higher at 3.9% to 4.4% from 2.5% to 3.0% in 2022

In 2023, they see:

  • GDP near unchanged at 2.1% to 2.5%
  • unemployment rate near unchanged at 3.3% to 3.6%
  • PCE inflation higher at 2.3% to 3% from 2.1% to 2.5% in December
  • core PCE inflation higher at 2.4% to 3% from 2.1% to 2.4% in December