FOMC Preview: Here Are The Possible Surprises In Today’s Statement

Today’s FOMC announcement at 2:00pm is expected to be mostly a non-event, and the only incremental information will be what is contained in the updated statement, which comes one month ahead of the Fed’s next expected rate hike in June. There will be no press conference and no update to the summary of economic projections. The statement is expected to incorporate modest changes to reflect recent (mixed) data but see the risks around the meeting are low.
Here is what Wall Street consensus looks like ahead of 2pm:
The market expect no rate hike at the May meeting; Fed Fund futures are currently pricing in a 65% probability of a June rate hike. There is a risk of a small hawkish surprise if the committee indicates they are “looking through” Q1 weakness in growth and inflation. A less likely dovish surprise could come from the FOMC emphasizing the decline in inflation. It is likely too soon for the committee to update language related to reinvesting balance sheet securities. Subsequent Fed speeches by Yellen, Fischer, Williams and Rosengren on Friday will likely provide additional color Continuing the trend from recent weeks, most Wall Street firms expect the Fed to hike twice more this year despite the recent slowdown in US economic indicators and the near record collapse in the Citi eco surprise index, in June and September and announce balance sheet reduction in December.

This post was published at Zero Hedge on May 3, 2017.