FOMC sticking to the script - ANZ
|Analysts at ANZ explained that the US FOMC stuck to the script this morning, acknowledging the slowdown in Q1 activity as household activity grew only modestly, but expecting it to be temporary.
Key Quotes:
"Headline CPI inflation “has been running close” to target, though core inflation lags. There was no mention of balance sheet reduction; the elephant in the room continues to slumber quietly. Markets took the statement in their stride as it provided no reason to re-price expectations for a June rate rise (currently around 70%)."
"If anything, the undertone from the statement is that the FOMC is confident in the economic outlook, which must, therefore, indicated a reasonable degree of conviction in the published dot plots for the fed funds rate, which implies two more hikes this year."
"It’s all about the data now for markets. Non-farm payrolls on Friday are expected to have risen by 190k, rebounding from the weather-driven dip last month (with retail weakness, i.e. store closures, also playing a part). Once payrolls are out of the way, Fed speakers will have their chance to sway market pricing – six of them speak on Friday alone!"
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