MNI Fed Review - Apr 2021: “Not Time Yet” For Taper Talk

Markets came away with a mildly dovish interpretation of the April FOMC outcome, with a modest upgrade to the statement's interpretation of the risk outlook upstaged by Chair Powell's emphatic press conference message that the Fed would remain patient with any decision to taper asset purchases.

• By far the biggest market mover was Chair Powell's answer to the opening question of the press conference Q&A, which queried whether it was time to "talking about talking about tapering yet". Powell said bluntly: "No. It is not time yet."
• Broad sell-side consensus remained steady after the meeting, based on MNI's reading of 24 sell-side reviews: asset purchase tapering is expected to begin by early 2022 (range of expectations from late 2021/Q3 2021 though), with Fed funds rate hikes not before late 2023/early 2024 (though liftoff timing ranges from mid-2022, to late 2024).
• This is not far off the path of futures-implied rates, which roughly continue to suggest that the FOMC will engage in rate liftoff in Q1 2023, with 3 hikes by end-2023, and another two in 2024.
• Please see the document linked below which includes the MNI View, our Policy Team's review, synopses of 24 sell-side notes, comparisons of the Statement vs the previous meeting's, and a transcript and highlights of the Powell Press conference.

FedRev-Apr2021.pdf