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The surprise from the Fed
While a 25 bps increase in the Fed Funds rate had been well-telegraphed in advance of today’s decision, the surprise from the Federal Reserve came in their forecasts for 2021. (In their June projections, the Fed’s forecasts extended only through 2020.) The Committee appears to be forecasting the perfect “soft landing” by 2021, yet appears concerned enough about inflation that they anticipate another five rate increases over the next nine quarters. Could the Federal Reserve be worried about the impact on inflation from tariffs and fiscal policy changes?