Focus In July FOMC Statement Is On Inflation Language, Fwd Guidance (1/3)

While MNI's view is that substantive changes to the July FOMC Statement vs June's is unlikely, there are some areas of focus.

• Apart from the expected 25bp raise in the Funds rate to 5-1/4 to 5-1/2 percent, and removing language regarding “holding the target range steady”, the forward guidance will again be the market focus of the July FOMC statement.
• The opening paragraphs on employment, growth and inflation could provide a meaningful surprise if the FOMC wants to send a subtly dovish message.

Analysts See Statement Changes As Limited: No analysts whose previews were seen by MNI expect any substantive changes to the July FOMC Statement’s forward guidance on rates vs June’s edition.

• A few see language describing inflation shifting in a dovish direction to acknowledge the softer June CPI print in particular.
• Some see potential for changes to the section describing bank stress, to reflect the apparent dissipation of risks from this sector since the paragraph was introduced in March.
• No analysts expect a change to the administered rates (ON RRP / IORB etc) at this meeting, or any changes to quantitative tightening policy. And no analyst expects any dissents to the decision.