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MNI Fed Preview - May 2023: Moving Meeting-To-Meeting

FED
MNI's May Fed meeting preview has just been published (emailed to clients, and in PDF here):
  • A 25bp hike in May could mark the end of the Fed’s hiking cycle.
  • With rates above 5%, and sticky inflation fears offset by the tightening effect of banking sector woes, the FOMC is likely to move to a meeting-by-meeting policy beyond May, while retaining a bias toward further policy firming.
  • But with widespread expectations that the Fed will change its forward rate guidance to hint at an end to the hiking cycle, or even open the door to cuts, there is a hawkish risk that guidance is left unchanged.
  • There is a case for the Fed to pause at this meeting, but that would be likely to signal panic about the underlying health of the banking sector.

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