NatWest: July Meeting Could Be Seen Either Hawkish Or Dovish

NatWest saw arguments to call the July FOMC meeting outcome either hawkish or dovish.

• The change in Statement language "does not signal an imminent taper, but clearly opens the door to taper later this year if the economy performs as expected."
• Powell made clear that the recovery remains on track and further progress is expected. He did not signal a rush for tapering. He emphasized uncertainty on the inflation outlook "and basically went back to it being transitory but (not surprising) did seem to have slightly less conviction than he did a few months ago."
• "while Powell refused to hint at what he may discuss at Jackson Hole in late August, Powell's confirmation of a late-August speech confirms the Jackson Hole symposium as a key event risk, and an opportunity for Powell to further the taper discussion."
• Future action: Nov meeting announcement for taper, "though Powell's reference of there being some support for a faster pace of MBS rundown does inject fresh uncertainty into the pace of tapering (coming into today we had very loosely penciled in a taper rate of $10bn UST and $5bn MBS per meeting)."