Bank of America Global Research discusses its reaction to yesterday's FOMC policy statement.
"Coming out of the November FOMC meeting, we retain our view that the Fed will downshift to a 50bp rate hike in December and, all else equal, would prefer to move in smaller increments going forward given the cumulative rate hikes that have already been implemented. We continue to expect two additional 25bp rate hikes next year in February and March, bringing the terminal target range for the federal funds rate to 4.75-5.0%," BofA notes.
"That said, given Chair Powell's comments that incoming data during the intermeeting period point to a higher terminal rate than the Fed was thinking in September, we see risks to our policy path tilted to the upside. The median FOMC member saw appropriate policy as calling for a terminal range of 4.5-4.75% in September. Although our current forecast remains above this median - consistent with Chair Powell's remarks about likely revisions to the appropriate policy rate path - we note that incremental revisions of the terminal rate at quarterly forecast meetings have been fairly substantial," BofA adds.