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Mar 19 - 10:55 AM

BofA: USD Scenarios Around March FOMC Meeting

By eFXdata  —  Mar 19 - 10:00 AM


BofA anticipates the Federal Reserve will maintain its dot plot in the upcoming March FOMC meeting, signaling potential adjustments in 2024's growth and inflation projections upwards. With the market already pricing in cuts, the Federal Reserve's updated Summary of Economic Projections (SEP) will likely steer initial USD movements. The market's expectations of Fed rate cuts stand at about -13 basis points by June and -70 basis points by year-end. Any deviation in the median dot projection, especially a reduction to two cuts, could initially rally the USD, while an unchanged dot plot coupled with an inflation outlook revision may trigger a USD sell-off.

Key Points:

  • Dot Plot and SEP: A crucial aspect is whether the Fed signals fewer rate cuts than currently anticipated.
  • Powell's Q&A: Further insights during Powell's question and answer session could clarify the Fed's stance on inflation and potential June actions, affecting USD direction.
  • Recent Fed Communications: Market interpretations of Powell's comments have varied, impacting USD performance across recent FOMC meetings and public appearances.


The outcome of the March FOMC meeting and Chair Powell's comments thereafter could significantly impact USD movements. Market participants will keenly observe any changes in the Fed's rate cut projections and inflation outlook, with potential shifts in the median dot to fewer cuts or an unchanged dot plot serving as key drivers for immediate USD reactions. Powell's ability to surprise markets underscores the importance of closely monitoring his statements for any hints of future policy direction.

BofA Global Research


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