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Apart from the statement, NatWest saw the rest of the outcome from the June FOMC as leaning more hawkish than expected.

  • The dot plot presents risks to NatWest's views that liftoff will begin in early 2024 (even though Powell again downplayed the importance of the dots).
  • Additionally, the projections show a much less patient FOMC vs March: 12 participants project core PCE of at least 2.1% in 2023 with 13 seeing at least 1 hike; in March this was 11 and 7 respectively. So "with only one additional member who modestly pushed up his/her core inflation forecast six additional members showed an implied higher funds rate—consistent with the officials will be less 'patient' on liftoff."
  • Powell sounded especially upbeat about the economy, and more open to the idea of some upside risks around inflation than he has in the past.
  • The minutes could shed some more light on tapering.
  • Future action: Tapering discussed in Jul and Sep, formally announced in Dec before early 2022 start. Rate liftoff in early 2024.