JPMorgan's assessment of the June FOMC:.........>

FED: JPMorgan's assessment of the June FOMC: Placeholder meeting, but dovish.

- There was unusual unanimity in the dots through 2022, as only two participants

expect any rate hikes by that time. While the dots are individual forecasts, the

unusual lack of dispersion in those dots means it should be easier for FOMC to

agree to more forceful forward guidance at upcoming meetings.

- Minor surprise that the median longer-run dot was unchanged at 2.5% but

consistent with the little-changed median view of real trend GDP growth of 1.8%.

- Even though we expected no further tapering in purchases, the clarity provided

by the Fed re Tsy/MBS buys should be welcome by markets.

- Comments by senior officials and Powell suggest more meaningful policy changes

likely in September: shift to either outcome-based or date-based fwd guidance,

perhaps supplemented with YCC (though Powell again downplayed YCC attractiveness

vs "main tools" of fwd guidance / asset purchases).

- If the Fed is able to complete its framework review by that time,

outcome-based guidance which conditions hikes on achieving infl objective would

be a powerful form of guidance and would obviate need for interest rate caps.