Fed officials upgraded median 2026 growth expectations to 2.3% from 1.8%, which better aligns with Scope’s 2.4% projection for 2026. Officials assumed slightly lower inflation, but given the resilient US economy, mixed labour-market data and above-target inflation, there was no need for the cut on Wednesday.
A Wide Range of Opinions Within the FOMC
Beyond the formal dissents, six FOMC participants pencilled no rate change for this week. On the other side, Stephen Miran – appointed recently by the President – signalled no less than 150bps of cuts for next year with the US President saying the 25bp cut Wednesday ought to have been “at least doubled”.
Fed officials authorised fresh purchases of USD 40bn a month of short-term treasury securities for maintaining an ample supply of bank reserves. After the quantitative tightening since 2022, this month has seen the brisk return to slight quantitative easing.
Global Government Yields Have Risen to Post-2009 Highs
Global average long-dated government bond yields rose earlier this week to their highs last seen in 2009 (Figure 1) – as markets priced a pause in US rate reductions alongside concerns around increasing global debt, inflation and tighter monetary policy.
Figure 1. 10-year treasury yields
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