MUFG Research yesterday's FOMC rate hike was the final one of the cycle.
"The most crucial take-away was the change in policy guidance – gone is the reference to the FOMC’s anticipation that “ongoing increases in the target range will be appropriate” and instead we now have the anticipation that “some additional policy firming may be appropriate”. We believe this clearly opens up the potential for yesterday’s hike being the last.," MUFG notes.
"A pause in the tightening cycle is not the formal signal with the median dot for 2023 still showing one further 25bp hike but we are unconvinced at this stage of that hike being delivered and see yesterday’s as more likely the last – but the banking sector health and data will ultimately determine that," MUFG adds.
Meanwhile, Bank of America Global Research lowered its terminal top from 5.25%-5.50% to 5.00%-5.25%.
"The outcome of the March Federal Open Market Committee (FOMC) meeting was broadly as we expected. The Fed lifted its policy rate by 25bp. That said, the Fed has taken on board some amount of tightening in credit standards and terms as a result of the recent stresses that emerged from several regional banks," BofA notes.
"We now project one more 25bp rate hike for a terminal range of 5.0-5.25%, down 25bp from our prior target terminal range," BofA adds.
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