Capital Economics on the Federal Open Market Committee January minutes released Wednesday

In brief …

On rates:

  • Hurdle for another Fed rate hike seems to be quite high
  • Cap Eco expect rates on hold through 2019
  • Then cuts in 2020 (total of 75 basis points of cuts through 2020) due to a deterioration in economic growth

On the balance sheet:

  • Says the minutes provided more clarity on b/s
  • Show an increasing possibility the Fed will halt b/s run-down during H2 of 2019
  • will end up basing around $3.5tln