Free Trial

Analysts: Limited Statement Changes, Hawkish-Leaning Powell, Slower QT (1/2)

FED

Analysts generally look for a more hawkish message from the FOMC today compared with March's meeting, in light of strong inflation and economic activity data. See our meeting preview for more analyst-by-analyst details.

  • Statement: None expect the Statement forward guidance to be changed, though a few see potential for tweaks. Several eye risks of the characterization of inflation to be changed in a hawkish fashion. One example is Nomura: Inflation language to drop “has eased over the past year”. Forward guidance to indicate a higher bar for future easing, removing “greater” from “until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
  • Press conference: Generally, Powell is expected to tilt more cautious on the inflation outlook than in previous appearances, with potential flashpoints for markets including whether he acknowledges that 3 cuts are now less likely to be the base case for the FOMC in 2024, and/or whether June is too early for the first cut.
  • QT Taper: Consensus is clearly for an announcement at this meeting, with Treasury runoff capped at $30B (vs $60B currently) starting in June. Some see caps set slightly lower ($22.5-25B).
189 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

Analysts generally look for a more hawkish message from the FOMC today compared with March's meeting, in light of strong inflation and economic activity data. See our meeting preview for more analyst-by-analyst details.

  • Statement: None expect the Statement forward guidance to be changed, though a few see potential for tweaks. Several eye risks of the characterization of inflation to be changed in a hawkish fashion. One example is Nomura: Inflation language to drop “has eased over the past year”. Forward guidance to indicate a higher bar for future easing, removing “greater” from “until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
  • Press conference: Generally, Powell is expected to tilt more cautious on the inflation outlook than in previous appearances, with potential flashpoints for markets including whether he acknowledges that 3 cuts are now less likely to be the base case for the FOMC in 2024, and/or whether June is too early for the first cut.
  • QT Taper: Consensus is clearly for an announcement at this meeting, with Treasury runoff capped at $30B (vs $60B currently) starting in June. Some see caps set slightly lower ($22.5-25B).