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Kevin Warsh's first Fed meeting could be more about communication than rates
Key takeaways
- Markets are fully expecting the Fed to leave its benchmark fed funds rate range unchanged at 3.50%-3.75%.
- Bank of America, however, expects Warsh and the rest of the Fed to adopt a more hawkish tone, reflecting stronger-than-expected economic data and persistent inflation pressures.
- The bank forecasts that policymakers will remove language suggesting a bias toward future rate cuts and upgrade their assessment of the labor market after recent payroll reports surprised to the upside.
Markets are fully expecting the Fed to leave its benchmark fed funds rate range unchanged at 3.50%-3.75%.
Bank of America, however, expects Warsh and the rest of the Fed to adopt a more hawkish tone, reflecting stronger-than-expected economic data and persistent inflation pressures.
The bank forecasts that policymakers will remove language suggesting a bias toward future rate cuts and upgrade their assessment of the labor market after recent payroll reports surprised to the upside. Markets are well ahead of that assessment, having priced in very high chances of one or more rate hikes this year.
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