The Fed’s Dovish Hike — But is it Enough for Markets?

PGIM Fixed Income

December 2018

Ellen Gaske, PhD, CFA, Lead Economist for the G10 Economies, Global Macroeconomic Research Team.

This risk off tone following this week’s FOMC decision may be reflective of a market that was disappointed that the Fed wasn’t yet more dovish. PGIM Fixed Income’s own base case for two rate hikes in 2019 is more in line with the Fed’s new projections, but we think there are downside risks at this point and anticipate that the auto-pilot rolloff of the Fed’s balance sheet will likely need to be revisited at some point in the upcoming year.

 

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