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NatWest View Change: Downgrading March Decision From 50bp Hike To Pause

FED

We had been expecting a 50bp hike since the unexpected core PCE strength but the latest bout of financial market jitters introduced significant uncertainty that we now believe officials will pause at next week’s FOMC meeting. At this point in time, depending on reactions in financial markets and eventual fallout on the overall economy, we wouldn’t rule out that the hiking cycle could even be over and that the next move by Fed officials may be lower not higher. We also expect officials announce that they stop reducing their holdings of Treasury securities and agency MBS.

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