The Federal Open Market Committee (FOMC) decision is due Wednesday, 3 May 2023 at 2pm US Eastern time, with Chair Powell's press conference a half hour later.
Earlier preview:
- FOMC preview: A dovish hike, but how dovish?
- Federal Reserve FOMC meeting this week - Goldman Sachs preview: 'Signaling a June Pause'
Snipper from ABN Amro on what they expect:
Our base case is that May will indeed herald the last Fed hike of this cycle, but we see the risk tilted toward the Fed continuing to hike through the summer.
The macro drivers have been conflicting of late. Consumption has surprised to the upside, suggesting resilience in the face of headwinds, but the trend since the pandemic has been for strength to be revised away, while recent high frequency data points to a rapid cooling in momentum.
Meanwhile, the banking sector turmoil does look to have driven a tightening in bank lending standards, but it is still unclear whether that tightening will persist; a key input in this regard will be the results of the Fed’s Senior Loan Officer Survey, due out over the coming week (there is no official release date, but precedent suggests it will be out around 8 May).
Given the significant uncertainty, we expect the Fed to shift to full data-dependent mode from the June meeting onwards.
For now, our base case is that rates will hold steady at 5.00-5.25% for much of this year, with the Fed starting a rate cutting cycle from December. This assumes that a mild recession unfolds over the coming months.
Analysts at ABN Amro highlight labour cost growth:
