State Street Bank: The Federal Reserve is weighing the practical necessity of a 3% target rate

Marvin Loh, an analyst at State Street, said the Fed cut interest rates as expected, but this could only be interpreted as hawkish action because officials had not changed their forecasts for the next two years. "This will allow rates to slide very slowly towards the theoretical neutral rate of 3 per cent," he noted. "Given the significant upward revision of gross domestic product in the Summary of Economic Projections (SEP), the inclusion of the word'extent 'in the statement to describe additional policy adjustments implies that some members of the FOMC are considering the practical need to reach the current long-term'dot plot' target of 3 per cent."