BofA: Many On The FOMC Are Getting Restless

BofA saw a more hawkish tone from the Fed at the June meeting, mostly from the FOMC as a whole but also with Powell offering an upbeat assessment of the economy with small steps toward the exit.

• "While Fed officials are talking about 'transitory' inflation, some clearly believe in greater persistence, which was reflected in upside risks to the PCE outlook in the SEP. Many on the Committee are getting restless, which shows that Powell will likely face dissents given that he leans on the more dovish side."• The FOMC moved a step closer to tapering: BofA notes that substantial further progress is now "a ways" away vs "some time".
• Powell acknowledged the risk that inflation could be more persistent; also noted that the labor force might be impaired for longer, which per BofA "changes the thresholds with regards to normalizing the employment-to-population ratio and also allows the Fed to consider greater upward pressure on wages".
• Future action: September taper announcement most likely, with tapering beginning at turn of the year.