- Expects to end asset purchases at next meeting
- FOMC will continue to have a target range for Fed funds rate rather than a single point
- Pace of tightening to depend on economy (may be faster or slower dependant on economy – bullish comment)
- Funds rate to be key rate communication policy
- Exit plan has some new elements
- IOER to be the main means of moving funds rate
- Overnight reverse repo only to be used as necessary and only to extent necessary
- Ending re-investments will come after first Fed funds hike (will keep churning QE)
- Not anticipating MBS sales right away
- FOMC intends to hold no more assets than necessary
Talking exit strategies is going to keep the market expectant but they may finally be happy that we’re finally fully on the road to rate hikes and that might possibly start the end of the trading rate expectations. There will be more to these moves yet but at some point rates will be more than priced in.
