Fed to reiterate its comfort with policy as it is, with little change in the projections – ABN AMRO

Previewing this week's Federal Open Market Committee (FOMC) meeting, "the Fed is widely expected to keep policy rates on hold at the conclusion of the December FOMC meeting on Wednesday," notes ABN AMRO senior economist Bill Diviney. 

Key quotes

"We expect the Fed to reiterate its comfort with policy as it is, with little change in the projections."

"Macro data in the US since the last meeting has also been mixed; while the jobs data last Friday were strong, the manufacturing sector remains very weak according to the ISM survey, and falling imports suggest softening domestic demand. Moreover, weakness in manufacturing seems to be spilling over to the services sector, according to the nonmanufacturing ISM survey."

"Ultimately, this should dampen consumer spending going into the new year, and our 2020 growth forecast is well below the Fed’s, at 1.3% versus 2.0%. As growth indicators come in weaker than the Fed expects, we think this will push the Committee to ease further, with one more rate cut likely in Q1."