Via an ANZ note on their Federal Reserve expectations, this their main points:
• Underlying inflation is not showing any signs of abating. Moreover, the spread of inflation throughout the services sector points to "sticky" prices, implying inflation will take time to moderate.
• The Fed is intensifying efforts to get inflation down and will remain resolute in its commitment to do so. We expect that the FOMC will hike by 75bp at its meeting this week, and Chair Powell will reiterate that more is needed.
• Based on current and expected price trends we now forecast a terminal fed funds range of 4.75-5.00% to be reached by Q2 2023, which is 100bp higher and almost six months later than we previously projected.
• Fed forecasts need to reflect a sustained period of restrictive policy leading to a lengthy spell of sub-trend growth. This will entail a steeper and higher dot plot, downgrades to growth and a higher unemployment rate.
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Earlier previews:
- ICYMI - Goldman Sachs now expect a 75bp Federal Reserve rate hike this week
- Week Ahead Preview: FOMC is the highlight
Meetings remaining this year (boxed in the pic below):
The statement from the FOMC is due at 1800 GMT on the 21st, Powell's press conference follows at 1830 GMT.
