FOMC Minutes (2/2): Deutsche And BMO Look For QT Clues

Deutsche: The January minutes "should shed more light" on the speed/timing of balance sheet runoff, "as Chair Powell had indicated at his press conference that the Committee had continued its extensive discussion" on strategy. Deutsche says the FOMC will have received staff presentations, and possibly "with specific cap options under consideration.

• Deutsche's also looking for "clues as to how the Committee's reaction function may evolve", in particular, thresholds for "improvement" in the inflation outlook (particularly when it comes to hikes in H2).
• RBC: Given the number of FOMC speakers in recent days, "we are not sure what nuggets the [minutes] can really offer up. Still, we will be looking closely for any elaboration on the degree to which an aggressive hiking cycle was discussed."
• BMO: Looking for "clues on near-term policy maneuvers", including potentially on a 50bp hike to start the cycle. As for balance sheet policy, "it's also unclear how aggressively the Fed intends to start QT, in terms of timing and degree of balance sheet run-off. Perhaps we'll be able to put some flesh on Powell's bone toss that QT will be "faster" this time."