Citi Preview: Small Chance Of More Decisive Taper Guidance

Citi sees a "small probability" the FOMC will give more decisive guidance on tapering at the April FOMC, but "the much more likely scenario" is a tweaked statement and little change in Powell's tone.

• "A hawkish surprise would be if the Fed acknowledged progress more prominently, paving the way to an advance warning of tapering asset purchases."
• Statement: To reflect a cautiously more optimistic outlook.
• Press conference: Powell to reiterate that the FOMC awaits more evidence that rehiring is continuing.
• Future action: More formal guidance "well ahead" of tapering may emerge at/before the June FOMC.
• Technical changes to IOER / ON RRP possible at this meeting, but base case is delay.