Snippet from a longer JP Morgan preview. Analysts are looking for a 50bp hike and say the probability of a 75bp hike is around 20%. Also expect an announcement of a reduction in bs. Oh, balance sheet, that is "in line with the parameters set out in the March FOMC minutes"
- We expect the most relevant part of the FOMC statement-the forward guidance on rates-will indicate an expectation that "ongoing increases" in the funds rate will be appropriate.
- In the post-meeting press conference we look for the chair to convey the need to expeditiously return the funds rate to neutral, and the high likelihood that the funds rate will need to go into restrictive territory.
This too:
- The Powell Fed has displayed a strong preference to telegraph its intentions ahead of meeting day, and for that reason we think 50bp is very likel
- But if there is a time to break from habit it's when the Fed's inflation credibility is being called into question, and so we don't write off the possibility of a larger rate move
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