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Not A Dovish Press Conference


To sum up, not a dovish press conference.

  • Powell didn't actively put a 50bp hike on the table for March, nor did he suggest the Fed could hike at every meeting this year. But he also didn't push back particularly hard at either of those concepts in the Q&A, and in fact in context repeated that this economy was "very different" to the last (relatively patient hiking) cycle, so speculation on a more hawkish path for policy will continue.
  • Indeed, he batted away the idea that balance sheet policy could be "active" in a way that could displace straight-up Fed funds rate hikes as a tightening tool, so that's another potential dovish angle discarded (e.g. SF Pres Daly suggested active QT could substitute for more rate hikes and mean a flatter fund rate path).
  • And he also subtly suggested (re discussions on the balance sheet at the next meeting, and likely the next) that a decision on QT could be made as soon as the May FOMC.

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