Fed cuts as they raise economic forecasts and also catches up to market pricing/Yields are jumping

The FOMC statement was about identical to what they said in November as they cut rates again even though they raised their 2024 GDP forecast to 2.5% from 2%, lowered their unemployment rate estimate to 4.2% from 4.4%, increased their headline PCE forecast to 2.4% from 2.3% and the core rate from 2.6% to 2.8%.

So, all their estimate changes should have pointed to a pause but they cut anyway and I guess Jay Powell at 2:30pm will help us better understand. Also of note for 2025, and we take with a grain of salt, they increased a touch their GDP forecast to 2.1% from 2%, lowered their unemployment rate estimate to 4.3% from 4.4% and raised their headline PCE guess to 2.5% from 2.1% and the core rate also to 2.5% from 2.2%. The 2025 median dot plot for the fed funds rate now stands at 3.9% from 3.4%. I’m not going to bother with the 2026 estimates as it’s too far out in time.

Finally of interest, Beth Hammack dissented and did not want a cut and I’m surprised that Bowman didn’t dissent either.