June Statement: Dissents Doubtful, But Possible (2/2)

May statement: "...In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5 to 5-1/4 percent. The Committee will closely monitor incoming information and assess the implications for monetary policy. In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. "

• The policy decision will be the most impactful part of the decision – MNI expects a hold at current levels, with the sentence reading “decided to keep the target range for the federal funds rate at 5 to 5-1/4 percent”.
• The forward guidance could change for one of two main reasons:
  • The FOMC wants to accompany a hold with language that explains its decision as intended to gain more time to gather more data to determine the extent to which further tightening may be appropriate. In a more hawkish version of this it could also tweak language to more forcefully suggest that it intends to hike at least once more.
  • Less likely: the FOMC wants to shift toward a neutral stance by modifying or eliminating the hiking bias (“additional firming may be appropriate”). This would of course be interpreted dovishly though such a change would probably only happen were the Fed to hike at this meeting. In this case the Statement would probably add language emphasizing that the FOMC intends to hold rates at the new level for an extended period of time.
• MNI expects the existing guidance to remain largely as-is: it already signals the Committee’s tightening bias, likely complemented by an upward shift in the median projections “dot” profile. Additionally, changes to the language on QT are very unlikely.

The final paragraph of the Statement is unlikely to be changed, and in the Implementation Note, we expect all of the main administered rates to remain unchanged.

• No dissents are expected. Though as our Policy team noted in their Jun 1 story, the most likely dissenting voters if any would be Kashkari/Logan (dissenting against a hold) or Harker/Goolsbee (dissenting against a hike).