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Powell Dovish, But Maybe Not Enough

FED

Powell's presser was largely dovish - making the usual caveats about dots, and forecasts, and remaining some ways from their goals, etc - but he also noted multiple times that there was a risk that inflation will remain higher than the FOMC projections show etc (that's something he didn't say last time). So the tune hasn't changed but some of the lyrics have. And probably not particularly dovish in the context of the SEP.

  • At the end of the day the situation is, 7 of 18 members see 2022 hikes based on the current forecasts. 2 more and that's a split board. Tapering will be well underway and probably over by the time the FOMC hikes. So it stands to reason that we're in line for a taper timeline at least as quickly as has been expected (late-2021 announcement for late 2021/early 2022 start) barring some real downside shocks in the data.

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