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Analysts at Danske Bank do not expect the Fed to hike the Fed funds rate tonight at 20:00 CET (in line with consensus and market pricing).

Key Quotes

“As it is one of the interim meetings without updated projections and a press conference, we do not expect Powell & co to make big changes to the policy signals in the statement.”

“We do not think the Fed will cut the interest rate on excess reserves by 5-10bp at this meeting despite the effective Fed funds rate trading exactly at the IOER.”

“We think the Fed will wait until December and then hike the target range by 25bp but only raise the IOER by 15-20bp. In our view, the Fed is on track to raise the Fed funds rate to 3%, which is the neutral rate, where monetary policy is neither expansionary nor contractionary. This will happen in June (hikes in December, March and June).”