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

FED
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. 

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