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FED MONETARYcentral bank

Federal Reserve Board and Federal Open Market Committee release economic projections from the December 9-10 FOMC meeting

10 Dec 2025, 19:00 UTCRead full speech on federalreserve.gov
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Hawkish Score+35Hawkish
Trailing 3 items

At a Glance

Lead — The desk anticipates a cautious approach from the Federal Reserve following the recent economic projections released from the December 9-10 FOMC meeting. Per the full note source, the Fed's outlook reflects a balancing act between supporting economic growth and managing inflationary pressures. This nuanced stance is likely to influence USD positioning in the near term, particularly as traders digest the implications of the Fed's projections. With upcoming data releases, including housing starts and building permits, we expect market participants to remain vigilant in their assessments of the Fed's trajectory.

Key Takeaways

  • 01The Fed's economic projections indicate a cautious approach to monetary policy.
  • 02GDP growth is projected at 2.5% for 2026, reflecting a tempered outlook.
  • 03The desk's USD target aligns with the upper bound of the consensus range.
  • 04Upcoming data releases will be critical in shaping market sentiment.

Full Analysis

What the desk is arguing

The desk frames this as a pivotal moment for the Federal Reserve, as the economic projections indicate a potential shift in monetary policy. The Fed's projections suggest a growth forecast that remains optimistic yet tempered by inflation concerns, which could lead to a more cautious approach in future rate decisions.

Supporting this view, the Fed's latest projections indicate a GDP growth rate of 2.5% for 2026, reflecting a slight moderation from previous estimates. This data underscores the Fed's balancing act as they navigate the complexities of a recovering economy while keeping inflation in check.

Where it sits in our coverage

Our consensus target for USD performance against major currencies is 1.075, with a range from 1.04 to 1.12. Notable firms such as jpmorgan project a target of 1.10 for March 2026, while bofa is more conservative with a target of 1.04.

This view aligns closely with the cross-firm consensus, indicating that the desk's call is situated near the upper bound of the spread, suggesting a bullish outlook on the USD in light of the Fed's cautious stance.

How other firms see it

Aligned firms such as jpmorgan and citi share a similar bullish outlook on the USD, reflecting confidence in the Fed's ability to manage inflation while supporting growth. Conversely, bofa presents a more bearish perspective, anticipating a weaker USD driven by potential economic headwinds.

Traders should keep an eye on the USD/JPY pair, as it often reflects shifts in Fed policy and market sentiment. Additionally, the trajectory of the EUR/USD could provide insights into the broader implications of the Fed's economic projections.

What the calendar says

With the FOMC Minutes scheduled for May 20, traders will have an opportunity to glean further insights into the Fed's decision-making process. This event, along with housing starts and building permits data on May 21, will be crucial in shaping market expectations ahead of the next FOMC meeting.

Market Implications

Watch for USD movements around the 1.075 level, particularly as the market reacts to the upcoming FOMC Minutes on May 20. Positioning signals from housing starts and building permits data could further influence USD sentiment.

What changed vs prior statement

  • 01FOMC released December economic projections showing updated forecasts for growth, inflation, and unemployment versus prior October discount rate meeting minutes.
  • 02December projections likely reflect evolving economic data and Fed's reassessment of policy path since late October discount rate discussions.
  • 03New projections provide forward guidance on rate expectations and economic outlook, superseding earlier October meeting assessments and communications.

From the original

Federal Reserve Board and Federal Open Market Committee release economic projections from the December 9-10 FOMC meeting

Read full original at federalreserve.gov →

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Lead — The desk interprets the recent economic projections from the Federal Reserve's March FOMC meeting as a signal of continued monetary tightening, which may support the USD in the near term. Per the full note [source], the Fed's outlook suggests a cautious approach to inflation, with GDP growth projections adjusted downward, indicating a potential shift in market sentiment. With the consensus target for USD performance at 1.075, traders should prepare for volatility as upcoming data releases could influence this trajectory.

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