MNI Fed Preview: Dropping The Tightening Pretense (1/3)

A quick summary of MNI's preview for today's FOMC decision is below (full PDF is here)

• The Federal Reserve will hold rates steady for the 5th time in 6 meetings in January, further cementing expectations that the hiking cycle is over and that the next move will be a cut. The main question will be the degree to which the Statement and Chair Powell leave the door open to a rate cut as soon as March.
• 16 meetings after initially adopting a tightening bias, the guidance is likely to finally drop it (“in determining the extent of any additional policy firming”) in favor of a more neutral stance.
• Maintaining the tightening bias unchanged is a hawkish risk for this meeting and would make some sense if the FOMC wanted to send a clear message that it was pushing back against market pricing for cuts. But continuing to signal that the next move would be a hike would be an increasingly disingenuous stance, as the discussion has clearly moved to how many cuts will be appropriate in the months ahead.
• The FOMC is also expected to discuss plans to slow the pace of quantitative tightening in the coming months, though it is very unlikely that any decisions will be reached or announced this month.