MUFG Research discusses its expectations for this week's FOMC June policy meeting on Wednesday.
"We expect the Fed to respond in the week ahead by sending a stronger signal that it will raise rates into restrictive territory to dampen upside inflation risks and slow the economy. The Fed’s updated dot plots are likely to be raised significantly from in March when the median projection for Fed funds rate at the end of this year was set at 1.9% and for the end of next year at 2.8%," MUFG notes.
"We do not expect the Fed’s updated projections to go quite as far as current market pricing but will clearly be in a much more hawkish direction. Overall, the Fed’s updated guidance should continue to support a strong US dollar," MUFG adds.
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