Deutsche Preview: Spring Too Soon For “A String”

Because the FOMC will still want to see "a string" of robust data prior to signalling a tapering timeline, Deutsche sees April as too soon for such a signal. Note, they've pushed back their rate liftoff call since the March FOMC (see below).

• Statement: Changes to reflect Powell's view that the economy is at an "inflection point", on both economic activity/employment and inflation. But will maintain note of caution re the pandemic.
• Press conference: FOMC's interpretation of recent data - and what it means for mon pol - to be a focus. Powell likely to continue his subtle shift into a more optimistic direction for the outlook, but to emphasize that the future trajectory relies heavily on the pandemic / vaccine, and that the economy is far from the Fed's dual mandate objectives.
• Powell to repeat recent language on inflation (transient/bottlenecks/global disinflationary pressures). He could refer to trend inflation metrics. He could be asked re NY Fed Logan's comments around tweaking asset purchases (fewer TIPS, more 20Yr Tsys) – Powell likely to downplay as technical.
• Future action: Taper announcement in December; first hike in mid-2024 (previously said Q3 2023).