MNI Fed Preview - Jan 2024: Dropping The Tightening Pretense
Jan-29 16:53By: Tim Cooper
EXECUTIVE SUMMARY:
Dropping The Tightening Pretense
- The Federal Reserve will hold rates steady for the 5th time in 6 meetings in January, further cementing expectations that the hiking cycle is over and that the next move will be a cut.
- Given participants’ pushback against 2024 market rate cut pricing since the December meeting, the main question will be the degree to which the Statement and Chair Powell leave the door open to a rate cut as soon as March.
- There is a good chance that the forward guidance will be amended to remove the tightening bias in favor of a more neutral stance, in light of recent disinflationary progress.
- But the FOMC will be wary of signaling a March cut, and will re-emphasize a patient data dependent approach.
- The FOMC is also expected to discuss plans to slow the pace of quantitative tightening in the coming months, though it is very unlikely that any decisions will be reached or announced at this stage.
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