Summary of Goldman Sachs' call for FOMC - Fed...>

FED: Summary of Goldman Sachs' call for FOMC - Fed to adopt QE, Fwd Guidance,

YCC - BUT down the road, probably Jul/Sep meeting:

- SEP: Elevated unemployment and below-target inflation through 2022. All/almost

all FOMC participants likely to project a flat funds rate path end-2022,

implying liftoff is likely to come only at a later date. Median longer run dot

to decline by 25bp to 2.25%, following decline in distant fwd interest rates.

- QE: Transition to a traditional asset purchase program with a steady monthly

pace of around $80bn Tsys/ $40bn MBS net.

- Fwd guidance: Likely to introduce outcome-based forward guidance that delays

liftoff roughly until the economy reaches full employment and 2% inflation.

- YCC: To reinforce its guidance with front-end YCC, capping interest rates out

to a horizon somewhat short of the date when the Committee forecasts its liftoff

criteria will be met. Because front-end YCC is intended to reinforce fwd

guidance, it will have to wait until FOMC settles on its fwd guidance and feels

comfortable forecasting roughly when liftoff criteria will be met.

- Will adopt average inflation targeting in Mon Pol strategy review.