UBS: Minutes Suggest FOMC To Take A Breather Later This Year?

UBS's review of the May FOMC minutes is focused on the potential for a pause in the hiking cycle later this year:

• "One section of the minutes alludes to a potential pause after getting to neutral, but that may be inferring too much. While the minutes note the Committee would take policy into restrictive territory if needed, there does not seem to be any consensus or much of a plan of what happens after getting to the more neutral stance. The minutes said 'many participants' thought the FOMC could be 'well positioned later this year to assess,' which almost sounds like taking a breather to see how the tightening might be working its way through the economy."

UBS's view on the rate path accords with this: they see the Fed hiking by 25bp to 2.50-2.75% at the December meeting and going on hold thereafter.