###POV: HOW PATIENT IS POWELL? With no..........>

FED: ###POV: HOW PATIENT IS POWELL? With no changes expected to the Funds rate

Wednesday, attention is on the FOMC`s tone, and balance sheet runoff policy.

- The most common word used by sell-side analysts to describe the upcoming FOMC

meeting's tone is 'patience', followed closely by 'flexibility' - in line with

Fedspeak from Chair Powell and other committee members since early Jan.

- Lack of data due to gov`t shutdown and market stability over the past month

also bolster case for the Fed to enter wait-and-see mode.

- As such, the base case: statement amends 'gradual increases' guidance on rate

hikes, replacing with emphasis on flexible/data-dependent approach - with Powell

reiterating this in the presser (thus walking back Dec's hawkish tone).

- Re balance sheet: no change, but policy addendum could be changed. Powell

likely to hint all options are open, while FOMC considers those options.

- Hawkish risk: No indication that Fed reconsidering balance sheet policy,

minimal/no change to rate guidance, no nod to weaker economic outlook.

- Dovish risk: Substantive announcement on ending asset runoff. Balance of

economic outlook risks downgraded; explicit language that rates are on hold.