FOMC is mindful of risks – Westpac

Elliot Clarke, analysts at Westpac, explains that in the recent FOMC’s short decision statement, changes to the language around the economy were minimal.

Key Quotes

“The Committee’s quantitative forecasts to 2021 further highlight their belief in the underlying strength of the US economy. Through 2018, 2019 and 2020 aggregate growth is expected to remain above potential of 1.75% at 3.0%; 2.3%; and 2.0% – only marginally below the forecasts of September (3.1%; 2.5% and 2.0%).”

“Despite this robust view of the US’ economy however, the focus on “global economic and financial developments” in both the risks section of the statement and, more notably, Chair Powell’s press conference makes clear that “cross-currents” are increasingly giving the Committee cause for caution.”

“On global growth, Chair Powell was clear in the press conference that the Committee believe momentum has turned and that there are downside risks to the outlook.”