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QT Plans Take Focus In March Minutes

FED

Some key aspects to watch in today's March FOMC minutes release (1400ET/1900BST):

  • How open the FOMC is to a 50bp hike in May (and future meetings)?
  • How much concern there is over an inverted curve? (Brainard noted yesterday she was "attentive" to this; Powell downplayed inversion beyond 18 months).
  • Is the FOMC still on track for a May balance sheet normalization ("QT") announcement, and if so, will it start in mid-May, or later?
  • What size of maximum monthly runoff caps are being considered? (They're expected to be much larger this time, vs $30B Tsy/$20B MBS of the last cycle)
  • How long will be the ramp-up period before reaching the maximum cap rate?
  • Will Tbills be excluded from the caps?
  • Are outright asset sales part of the plan? (especially for MBS)
  • Is there a consensus over whether a particular runoff pace is equivalent to a certain number of rate hikes? (Powell suggested last month that the plan under consideration would equate to about one 25bp hike this year)
  • If QT starts in May, does that preclude a simultaneous hike >25bp?

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