Hawks See FOMC Following Through With 50bp Hike Forecast (2/3)

On the hawkish end of the handful of analysts who see the Fed fulfilling the 50bp of Dot Plotted hikes by end-year, several saw the FOMC's decision as vindicating their outlook:

• Barclays: "By emphasizing that the committee is “holding the target range steady at this meeting,” it conspicuously provides no indication of another skip at the July meeting, or any other meeting for that matter. This, combined with the SEP, suggests that a July hike is likely, along with another hike in September. And the replacement of “in determining the extent to which additional policy firming may be appropriate” with “in determining the extent of additional policy firming that may be appropriate” provides additional signals that the FOMC anticipates additional hikes. Future action: 25bp hikes in July and September. Could see Sept replaced by Nov.
• CIBC was also among the analysts looking for 50bp of further hikes prior to the June meeting: "The FOMC opted to exercise patience but by the July meeting, policymakers will likely have obtained enough additional information on labor market strength to take rates higher." Future action: 25bp hikes in Jul and Sep.
• The June FOMC’s hawkish surprise was not the 25bp hike Citi expected, but rather the 50bp rise in the 2023 dot median. But they write that markets will be skeptical until the Fed delivers (or firms up guidance) around further hikes. Powell repeatedly referenced moving at a more “moderate pace” but was most intent on saying it is now the terminal level of policy rates that matters, not the speed with which that level is reached.Future action: 25bp hikes in Jul and Sep (was Jun and Jul)
• BofA joined the more hawkish camp following the FOMC meeting, based on the communications: "In our view, data is likely to validate the median dot as we move into July." Future action: 25bp hikes in Jul and Sep (vs no hikes seen prior to the June meeting outcome)