Preview comments from BNP on the FOMC meeting this week, analysts at the Bank says the minutes will be the most interesting news about this meeting!
Some of the key points, in summary:
1. ... we’re back in a ‘high rates for longer environment’.
2. we can expect strong insistence on the data dependency of decisions
3. The validity of this approach has been vindicated by recent inflation data. This is not an environment for pre-committing and giving clear guidance about when rate moves will be made and how fast.
4. We should expect that Chairman Powell will say he is confident that inflation will decline (if not, he would trigger a bond market sell-off) but that it will probably take more time.
5. he will say that it's unlikely that rates would have to be raised as a next move. If inflation turns out to be sticky for longer, keeping current rates should be sufficient.
6. THE question to be asked: does high for longer (because there is no landing at this stage) imply that the risk of a subsequent hard landing will increase?
7. The most interesting news about this meeting will only come on 22 May, with the publication of the minutes. Rarely will they have been so eagerly awaited, the key question being to what extent many or most members of the FOMC would have shifted to the ‘hold rather than cut camp’ and whether the possibility of a hike this year has been discussed.
***
Separately, BNP expect the first cut in December, they were previously forecasting July.
***
The Federal Open Market Committee (FOMC)'s policy decision will be released on Wednesday May 1 at 2 pm US EDT (1800 GMT) with Fed Chair Jerome Powell following up with his press conference at 2:30 pm (1830 GMT).
