Powell Reacs: ABN Has Questions, BNP Sees Higher Bar To Tighten

ABN AMRO sees no immediate implications for monetary policy post-Powell speech. But "some key unanswered questions for us are: 1) from when will this new framework apply? (i.e. will the Fed take into account the past few years of inflation undershoot?), and 2) what happens if inflation is persistently above 2% for a time – will the Fed then try to engineer below 2% inflation?" They expect Powell to be questioned on these at the Sep FOMC presser.

BNP Paribas says "the formal release of the Fed's longer run policy statement and an asymmetric recharacterization of the employment mandate were dovish surprises"...raising the bar toward tightening policy more than had been expected. They see the FOMC announcing an outcome-based liftoff policy at the September meeting (unch, though they'd previously seen both the framework review results and fwd guidance unveiled simultaneously in Sep).