April FOMC Reaction from Morgan Stanley, who....>

FED: April FOMC Reaction from Morgan Stanley, who expected an announcement at

this meeting of $150bln/month "flexible duration" Treasury buys:

- Statement's language on the economy indicates that policymakers are certainly

concerned about longer-lasting economic scars and prolonged economic weakness.

It also provides a natural transition to the economic-outcomes-linked forward

guidance than we are expecting.

- Expect tying accommodation more explicitly to economic outcomes at the June

meeting when the Fed releases updated projections.

- Powell indicated there remain fires to fight, suggesting the Fed still sees

liquidity as a priority over easing financial conditions further.

- The June meeting is the next opportunity for it to move into an open-ended

flexible duration monthly QE buying program,as we expect.

- Re IOER: As reserves continue to grow, we would expect EFFR to continue to

drift lower. Ultimately, the Fed may have to make this adjustment at the June

meeting (if not earlier).