THE FOMC WILL INITIATE THE FIRST CUT TO THE FEDERAL FUNDS RATE AT ITS JUNE 12 MEETING – WELLS FARGO

Economists at Wells Fargo do not expect any policy changes from the FOMC at its meeting next week. But the Committee's post-meeting communications should shed more light on the potential path of policy adjustments later this year, they say.

Median dot for 2024 will remain unchanged at 4.625% 

We do not expect the FOMC to change the federal funds rate or alter its current pace of balance sheet runoff at its upcoming meeting on March 19-20.

We now expect the FOMC will initiate the first cut to the federal funds rate at its June 12 meeting (our previous expectation was at the May 1 meeting). We look for 100 bps of easing in total this year and another 100 bps of easing over the course of 2025 to bring the fed funds target range to 3.25%-3.50% by year-end 2025.

Our base case is that the median dot for 2024 will remain unchanged at 4.625%, but the risks are skewed toward a higher median given the distribution of the prior dots and the recent run of inflation data. Similarly, we expect no change to the 2025 and 2026 median dots, though here too we think the risks are skewed to the upside.

Our base case remains that the FOMC will announce a plan to slow the pace of QT at its June meeting, although we would not be shocked if the Committee decided to do so one meeting earlier or later.