Next week, the Federal Reserve will have its monetary policy meeting. Market participants anticipate that the central bank will keep rates unchanged. Analysts at Wells Fargo also expect rates to remain unchanged, and they see the economic projections from FOMC members reflecting a more optimistic outlook for the US economy.

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We look for the FOMC to keep its target range for the federal funds rate unchanged at 5.25-5.50% at its meeting on September 20. Most market participants expect rates to remain on hold as well.

The FOMC will release its quarterly Summary of Economic Projections (SEP) at the conclusion of the meeting. We expect that the September SEP will portray a more optimistic outlook for the U.S. economy than the last SEP did in June. Specifically, we look for the FOMC to raise its forecast for real GDP growth this year while also nudging down its outlook for inflation.

We do not think the median dots for 2024 and 2025 will change much, if at all, though some of the highest dots may be reined in a bit.