NEW YORK, Sept 20 - The Federal Reserve held interest rates steady on Wednesday but stiffened its hawkish stance, with a further rate increase projected by the end of the year and monetary policy kept significantly tighter through 2024 than previously expected.
"And that's where the surprise was – the 2024 median dot moved up 50 basis points. But while all the focus will remain on whether the Fed is hawkish or dovish, really it's the economy that remains hawkish...2024 is where the signal is and it continues to read like a soft landing: upward revisions to growth and downward revisions to unemployment despite keeping inflation projections largely unchanged in their continued path of moderation.
"Regarding macro data, the next important dates are Oct 11 for PPI and Oct 12 for CPI. In my opinion, soft landing is very possible." "Policymakers are clearly trying to shift from 'higher' toward 'longer' in their communications strategy as they work to prevent a counter-productive easing in financial conditions. But the fundamentals also support this strategy - signs of excess demand are everywhere in the U.S. economy, and headwinds remain remarkably subdued."
"To some extent, talk is cheap. I do think that they'll remain data dependent and you'll probably hear that from Powell at the 2:30 press conference and going forward as well. So yes, they're talking about higher rates for longer, but it's really the economy that matters. And if the economy starts to soften, I don't think these dot-plot projections will actually hold up, so we'll certainly be waiting and watching.