daly Federal Reserve

  • We can also make announcements on reducing the balance sheet as soon as May
  • Since March meeting, we have seen new evidence that the economic expansion is self-sustaining
  • Hiking to 2.50% this year is not abrupt or surprising
  • Expect US economic growth to slow below trend but not tip into recession
  • Premature to decide how restrictive policy may need to get, need to evaluate  inflation  and supply chains
  • US labor market is ‘frothy’

The market is pricing in a 99.6% chance of a 50 bps hike; this confirms it. The bigger question will be about what the FOMC tees up for the subsequent meeting. A big part of that will depend on the CPI report that’s due a week after the FOMC decision.