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Fed Pricing Ahead Of FOMC

  • Hikes implied by Fed Funds futures are little changed on the day despite broader risk-on ahead of today’s FOMC decision.
  • It is still widely expected to hike 25bps today (28bp priced) and has just shy of 100bp of hikes over the three meetings up to and including June.
  • There is 175bp of cumulative tightening priced for 2022, hit for the first time earlier this week, from ~120bps after the Jan 26 meeting.
  • The Dec dot plot had a median estimate of 3x25bp hikes with only two participants at 4x25bp in 2022. Broad consensus is for the dots to now show between 4 and 6 hikes (assuming all hikes of 25bp). 5 is MNI's baseline, with risks of 6. 4 would be a very dovish surprise; 6 would be a modestly hawkish surprise; 7 or more would be very hawkish. (Full preview:

Cumulative hikes from FOMC-dated Fed Funds futuresSource: Bloomberg

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