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Deutsche Bank analysis team is expecting no change in policy from the US Fed in March and suggests that the meeting should reinforce the message that the bank will remain patient for now.

Key Quotes

“Our economists believe that there are two key topics that market participants should focus on.”

“The first is any signals about the timeline for ending the Fed’s balance sheet unwind and the second is any insights into the conditions needed to drop their patient guidance and possibly raise rates again later in 2019.”

“On the former, while an announcement of the date for stabilising the SOMA portfolio is possible next week, we now think it is more likely at the May FOMC meeting.”

“On the latter, Powell should maintain significant flexibility while likely reiterating that a dissipation of the crosscurrents, evidence of continued above-potential growth, & higher inflation are all likely preconditions for another rate increase this cycle.”