The Federal Reserve's Federal Open Market Committee (FOMC) meet Wednesday, 22 March 2023.
- Statement due at 1400 US Eastern time, 1800 GMT
- Federal Reserve Chair Powell follow up with his press conference at 1430 US Eastern time, 1830 GMT
From ANZ's preview, the summary points. Take note of the final one on QT:
- The swift and powerful response by the Fed, US Treasury and FDIC in response to the collapse on a few US banks has helped calm markets for now. The market is assigning an 85% chance the Fed hikes by 25bp tomorrow.
- We favour a 25bp hike in the fed funds rate (FFR) range given that inflation remains a significant problem for the Fed. The recent tightening in financial conditions may give the Fed grounds to pause, and much will depend on their conviction about the resilience of the financial system.
- The Fed may need to reconsider its position on quantitative tightening (QT) given it's exacerbating the short-term liquidity challenges for smaller banks and it's adding to volatility in the bond market. An adjustment to QT seems appropriate, either an end, a step down, or a pause.
