The Fed meeting is the key item on the agenda today
- FOMC preview - 'expect another dovish shift from the committee'
- FOMC meet Wednesday 1 May 2019 - preview
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- USD: Scope for FOMC to cut IOER on Wed - MUFG
- Federal Reserve's FOMC meet Wednesday - preview
The meeting decision and statement will of course be accompanied by Powell's press conference thereafter. No change is expected for the meeting today, with Fed funds futures pricing in a 97.5% probability of such a scenario happening.
Hence, the focus will be more on the language with the key area likely to be the Fed and Powell's take on the inflation outlook. The US Q1 GDP report already hinted at slowing inflationary pressures and we now get to see how the Fed chooses to respond to that, so that will likely set the tone for what to expect in the coming months i.e. more dovish Fed on worsening inflation outlook perhaps?
There's also talk of a potential IOER cut by the Fed to limit the ceiling of the Fed funds rate but I reckon this will be taken more along the lines of a technical/operational adjustment rather than a change in policy stance. Nonetheless, it is something to be aware about as market participants could single out details like these for a potential move.
With Trump continuing to sound his thoughts on the Fed as seen here yesterday, it'll certainly be interesting to see how the Fed will want to go about their communication as inflation data starts to put a bit of pressure on their current policy stance.
