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Minutes Preview: BMO, ING Eye Bearish Risks; Citi Growth Concerns (3/3)

  • BMO: " hawkishness conveyed within the Minutes introduces a bear flattening risk as the official communication will remind investors of the FOMC’s normalization commitment... any update on the Fed’s comfort with well over $2 trn in the RRP is something to watch for"
  • Citi: "any more insight into how exactly May CPI and June inflation expectation factored into the decision to hike rates by 75bp as opposed to the 50bp hike signaled ahead of the blackout period. Any guidance on how rare (or not) further greater-than-50bp hikes will be or how high the bar is (or is not) for additional large hikes would be particularly useful. Additionally, we will pay close attention to any comments on growth concerns and how the Fed might adjust policy in response to softer activity data."
  • ING: "With no clear sign of a deceleration in inflation, our economics team sees no reason for Fed officials to drop their hawkish rhetoric... If Powell’s recent remarks are anything to go by, the tone of the FOMC minutes will cause cognitive dissonance, with markets now openly questioning how far and how long the Fed can tighten policy before having to reverse course."

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