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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.
FED
BofA sees the message from the Fed's June meeting being "one of patience with an emphasis on outcome-based rather than outlook-based monetary policy". "This is not a Fed that is rushing to the exits."
- Risks are skewed toward a hawkish sounding Fed given the recent rates rally, but it would take more than a 2023 median hike to be seen as hawkish; that would likely take Powell signalling concern about financial conditions / inflationary pressures.
- SEP/Dot Plot: 2021 GDP and inflation revised higher, 2022 inflation nudged higher – bigger revisions would be a hawkish signal. No change to 2023 median fed funds dot.
- Press conference: Powell to acknowledge "talking about talking about" tapering, but reiterates it will be "some time" before substantial further progress has been made. Powell emphasizes payrolls weakness is due to lack of supply rather than demand, so jobs still on track for substantial progress.
- Administered rates: IOER and ON RRP hikes more likely than not.
- Future action: BofA sees the FOMC committing to tapering by the Sep 2021 meeting, with implementation early 2022. Rate liftoff in 2H 2023.
Source: BofA. Note these are BofA's forecasts, not necessarily forecasts for what the Fed will put in the SEP
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.
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