FOMC preview: Focus on whether Fed still expect to hike rates this year – NAB

The US Federal Reserve’s  (Fed) Federal Open Market Committee (FOMC) monetary policy decision is due to be announced later on Wednesday at 1800GMT, with the National Australia Bank (NAB) analysts eyeing the dot plot charts for further cues on the interest rates outlook for this year.

Key Quotes:

“FOMC meeting on Wednesday will include a new set of forecasts and Chair Powell’s press conference. There should be some hefty revisions to the outlook, with our focus on whether members still expect to hike rates this year and if the committee has adjusted its estimate of the neutral funds rates.  

Recent speeches suggest members expect 0-1 more hikes this year, down from 2 hikes projected in December, and that the range for the neutral rate has been trimmed to 2.50-2.75% from 2.5-3.5% in December.  

The Fed could also update its plans for its balance sheet, where we think the Fed will most likely halt the rundown by the end of this year.  

Markets continue to price the Fed as being done in raising rates, with the next move priced as a 22% chance of a cut by year’s end.”