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JPMorgan: Fed To Set The Stage For November Taper Announcement

FED

In contrast to previous meetings, JPM expects September's FOMC to be "rather eventful" as a November taper announcement is teed up.

  • Statement: Could be changed to sound like the statements preceding the 2013 taper announcement, which would be seen as a strong indication of a November announcement.
  • SEP/Dot Plot: Median 2022 dot to show one hike, with 2023 showing 2 further hikes, and 2024 another 3 hikes (so total 6 hikes in the path). The 2024 dot to reflect argument that last cycle's 25bp/quarter hiking pace should be slower this time as the est neutral Funds rate is now 50-100bp lower, so a more leisurely pace is warranted.
  • Future action: November taper announcement. Symmetric $10B Tsy / $5B MBS reduction per meeting (somewhat less than JPM previously expected, due to earlier than expected taper announcement), affecting mid-Nov to mid-Dec purchases and getting to zero net purchases by around Sept 2022. 2023 rate liftoff.
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