• As expected, the January FOMC was a placeholder of sorts, as Fed leadership had already in recent weeks telegraphed many of the main messages that emerged in Powell's press conference.
• The notable theme emphasized by Powell was that the FOMC views the US as still a "long way" from a full economic recovery.
• This will keep the FOMC reticent to even begin considering tapering asset purchases, particularly as it stands ready to regard any near-term spikes in inflation as "transient".
• Sell-side opinion was mixed as to whether the meeting communications should be interpreted as more hawkish or more dovish vs expectations, but either way, the meeting had no impact on analysts' views on the medium-term policy outlook. The broad sell-side consensus is that tapering will begin in 2022, though expectations range from as early as mid-2021 to as late as 2023. Fed funds rate hikes not seen before late 2023/early 2024.

Please see the document linked below which includes the MNI View, our Policy Team's review, synopses of 22 sell-side notes, comparisons of the Statement vs the previous meeting's, and a link to the transcript of the Powell Press conference.

FedRevJan2021.pdf

Table lists sell-side analysts' expected timing for the Fed beginning tapering asset purchases, from soonest (top) to latest (bottom):

Correct to the best of MNI`s knowledge as of Jan 28