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JPM sees two questions about tapering: do they talk about it at the June meeting, and if they do, how will we learn about it? They expect the FOMC to talk about tapering (given April FOMC minutes flagging "upcoming meetings" for the discussion). And if so, we may learn about it in Powell's introductory press conference remarks (followed up by restating remains far from "substantial further progress").
- Statement: To take the back seat to press conference and dot plot; no changes in guidance, little revision required to economic developments.
- SEP/Dot Plot: Median dot to show liftoff in 2023. If so, it's reasonable to see a few more hike dots in 2022. GDP and inflation forecasts to be revised higher in 2021, but not as clear that unemp rate will be materially revised. 2023 inflation median unchanged.
- Press conference: Powell will indicate that the Committee talked about tapering but that it believes the economy is still far from meeting the "substantial further progress" test to actually begin tapering.
- Administered rates: Close call on a change to ON RRP / IOER, but lean toward no adjustment.
- Future action: JPM has brought forward their expectations for rate liftoff to late 2023. Don't expect guidance on tapering until a few meetings before it starts (so, the fall).