Analysts Split On Forward Guidance Changes (3/3)

While there are no analysts who expect a rate cut or a QT announcement today, a majority of analysts expect meaningful change in the forward rate guidance, which currently reads “in determining the extend of any additional policy firming that may be appropriate to return inflation to 2 percent over time”. Some who don’t include Morgan Stanley; Scotiabank; TD; UBS; and Wells Fargo. But of the wide range of expectations for the change in forward guidance:

• “any adjustments to the target range for the federal funds rate.” (Barclays)
• “in determining any future policy rate adjustments that may be appropriate to return inflation to 2 percent over time…" (BofA)
• “appropriate policy settings" (Citi)
• "any future policy adjustments" (Deutsche, who also expect the 2nd para to be fully replaced)
• “be appropriate for policy to remain at a restrictive stance until inflation is clearly moving down sustainably toward the Committee’s objective.” (Goldman Sachs)
• “in determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective” (ING)
• describe current policy as “sufficiently restrictive", potentially appending language “keep policy restrictive until we are confident that inflation is on a path to that objective” (JPMorgan)
• “The Committee judges that the current restrictive stance of monetary policy will continue to restore balance and bring inflation back to our 2 percent longer run goal. The Committee will need to maintain a restrictive stance for some time to fully achieve our goals, and it will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2 percent on a sustained basis.” (NatWest)
• “determining the extent of future adjustments to the target range for the federal funds rate" (Nomura)
• "any future adjustments" (SEB).