March FOMC meeting puts Powell, dots on centre stage – Standard Chartered

Analysts at Standard Chartered believe that the FOMC will upgrade its median growth forecast for 2018-19 to 2.6% and 2.2%, respectively, in light of recent fiscal measures; but the median projected FFTR is unlikely to move higher at this stage.

Key Quotes

“We expect both the statement and the chair to strike a more hawkish tone in order to prepare markets for the possibility of an additional hike in 2018 and even 2019, perhaps at the June or September FOMC meeting. We think there is little chance of the median long-run neutral FFTR moving higher. Finally, we believe the Fed will look through the recent LIBOR-OIS widening.”

“The March FOMC meeting and press conference will be of particular interest:

1.     It is Powell’s first ‘live’ meeting and first press conference as chair.

2.     Powell’s strength as a leader will likely be closely gauged, both internally within the Committee and externally by market participants and the press.

3.     The FOMC is very likely to raise the fed funds target rate (FFTR) another 25bps to 1.75%, and give additional colour on its view of real growth, inflation and likely policy path, in light of fiscal policy changes.

4.     The Committee may comment on financial conditions, LIBOR-OIS widening.”