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FOMC Minutes: MS Saw "Balanced Tone", Goldman Saw Little New (2/3)

FED

Morgan Stanley: The July minutes had a "balanced tone", but "revealed a firm commitment to remain on an aggressive path of policy tightening, beyond a higher short-run neutral level, and maintain that higher level for longer".

  • Powell's omission of "longer run" when describing the policy rate as in the range of neutral was clarified: Rates are "now in the range of longer run neutral while at the same time “some” participants recognize that short run neutral is somewhere above the current level."
  • MS continues to see 50bp hikes in Sept and Nov, with a final 25bp hike in Dec.
Goldman Sachs: The minutes "provided little new information". The "inflation language was hawkish but broadly as expected".
  • Goldman still sees a 50bp hike in Sep and concluding the cycle with 25bp in Nov and Dec.
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Morgan Stanley: The July minutes had a "balanced tone", but "revealed a firm commitment to remain on an aggressive path of policy tightening, beyond a higher short-run neutral level, and maintain that higher level for longer".

  • Powell's omission of "longer run" when describing the policy rate as in the range of neutral was clarified: Rates are "now in the range of longer run neutral while at the same time “some” participants recognize that short run neutral is somewhere above the current level."
  • MS continues to see 50bp hikes in Sept and Nov, with a final 25bp hike in Dec.
Goldman Sachs: The minutes "provided little new information". The "inflation language was hawkish but broadly as expected".
  • Goldman still sees a 50bp hike in Sep and concluding the cycle with 25bp in Nov and Dec.