No change in policy is expected from FOMC today and Fed is likely not ready to announce tapering yet. Chair Jerome Powell would just reiterate that “substantial further progress” has been “met for inflation”, and there has also been “clear progress toward maximum employment”. Also, it’s appropriate to start tapering “if the economy evolved broadly as anticipated
A major focus in the median dot plot, where two rate hikes were penciled in by 20223. For 2022, there were 7 out of 18 participants anticipating one or two hikes. The overall picture could tilt towards the hawkish side if just one or two members bring forward their rate forecasts to 2022. Meanwhile, the new staff economic projections will catch some attention too.
Here are some suggested readings on Fed:
- FOMC Preview: Fed to Affirm Tapering Could Come This Year. Focus Turns to Dot Plot
- Fed Meeting: Forget the Slow Crawl to Tapering, it’s the Dot Plot that Matters
- FOMC Meeting Preview: Will We Get A Taper Hint?
- Fed Research – Preview: What to Do in a Bad Trade-Off?
- Musical Chairs at the Fed: Powell or Brainard?
