The Fed raised rates for the fourth time since December 2015. It was a dovish hike, in which the Fed raises rates but takes down its forward-looking economic projections.
On the growth front...
The Fed marginally raised its 2017 estimate for US economic growth, to 2.2% from 2.1% at the March meeting. That’s too bearish. Our proprietary GDP algorithm has year-over-year growth accelerating from an estimated 2.35% in 2Q17 up to 3.05% by 1Q18.
The Fed has it right on inflation
The central bank cut its projection for PCE inflation to 1.6% from 1.9% in March. It’s worth noting, three months ago, we made the call on #Reflation’sRollover (i.e. falling inflation). Our inflation estimates have the Consumer Price Index falling from the first quarter’s 2.5% to 1.08% by 1Q18.
