TD: FOMC To Emphasize More Progress Is Required

TD expects the FOMC "to have discussed a progress-dependent tapering plan at the [July] meeting while also emphasizing that actual tapering will require more progress than is evident thus far.

• Statement: The FOMC is likely to take first steps in the direction of "substantial further progress", with this line in the section on asset purchases: "While the conditions for beginning to reduce the pace of asset purchases have yet to be met, progress is expected to continue in coming months."
• "Could take the opportunity to flag the nascent Delta risk."
• Press conference: Powell to acknowledge ongoing FOMC discussions about tapering plans, but "substantial further progress" is still a "ways off". And the recovery remains on track despite the Delta covid variant, and the surge in inflation is "largely" transitory.
• Future action: December announcement (signaled well in advance), $10B Tsy / $5B MBS per meeting taper pace, concluding at the Nov meeting. First rate hike in Dec 2023.