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Morgan Stanley: Laying The Groundwork For Increased Flexibility

FED

Morgan Stanley sees "the balance of recent evidence" as leading them to believe that many FOMC members believe it's time to provide themselves more flexibility on removing accommodation – and will use the June meeting "to lay the groundwork for increased flexibility by 'talking about talking about tapering'."

  • SEP/Dot Plot: Notable near-term upward revisions to inflation projections. Even split on 2023 rate hike median (9 vs 9 dots).
  • Press conference: "The most likely opportunity for updated guidance on balance sheet discussions to be provided."
  • Administered rates: No changes at this meeting.
  • Future action: Tapering guidance at Sep FOMC, announcement in Mar 2022, start April 2022.


Source: Morgan Stanley

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