Analyst: Fed statement leans dovish, expects a 100 basis point rate cut next year

On December 11, analyst Anna Wong stated: “My assessment is that the overall tone of the policy statement and updated forecasts leans dovish—although there are some potential hawkish signals. On the dovish side, the committee significantly upgraded its growth trajectory, lowered inflation expectations, and kept the ‘dot plot’ unchanged. The Federal Open Market Committee also announced the initiation of reserve management purchases. On the other hand, a signal in the policy statement indicates that the committee leans toward a long-term pause in rate cuts.” She continued: “Although the ‘dot plot’ shows only one rate cut in 2026—and the market expects two—our view is that the Fed will ultimately cut rates by 100 basis points next year. This is because we expect wage growth to remain weak, and there are no clear signs of inflation reigniting in the first half of 2026.” (Jin10)