FOMC previews from down under

The Federal Reserve's Open Market Committee statement is due 04 May 2022

Some previews via Australian & New Zealand bank analysts:

BNZ:

a 50bps hike is well anticipated and fully priced, and timing will be given on the start of quantitative tightening, expected to begin soon.
There will be more interest in Powell’s Press Conference for a sense how rapid the Fed Funds rate might need to increase and how much beyond neutral it might have to go in light of recent economic developments.

ANZ

“We expect the Fed to raise rates by 50bp and simultaneously announce quantitative tightening, which will result in an asset reduction of around USD95bn per month. Based on current levels of excess demand evident across many sectors of the economy, we expect a period of restrictive interest rates will be necessary. We have raised our fed funds path by 50bp, including back-to-back 50bp hikes in June and July, and now expect the top end of the fed funds target range to hit 2.75% by year-end, in line with our estimate of neutral. We also expect a terminal rate of 3.75% to be reached by June 2023, which is 50bp higher than our previous forecast.”

Westpac

“Heading into the May meeting, members of the FOMC are singularly focused on the historic pace of inflation and associated risks. A 50bp hike in the fed funds rate at this meeting is therefore anticipated along with a clear signal that the rapid tightening of rates will continue in June and be paired with a quick ramping up of quantitative tightening through mid-year. While unlikely at the May meeting, from June/July the FOMC’s view on risks will again broaden to include activity. Assuming inflation pressures are by then showing signs of easing, the July meeting is likely to see a return to 25bp increases in the fed funds rate, taking the policy rate to a peak of 2.375% at year-end.”

Earlier preview posts here: