The short version Federal Open Market Committee preview
The Federal Reserve FOMC statement will come Wednesday 22 September 2021 US time.
- at 1800 GMT with Chair Powell's press conference following.
BNZ have a real quick summary of what to expect (bolding is mine):
- While the FOMC will discuss the timing of tapering asset purchases, we don't think it will come to a decision at this meeting. The decision will likely be left to the November or December meeting, after more data on the employment situation comes to hand.
- The Fed's updated projections could easily cause some market reaction, in particular the dot plot outlining each member's expectations for the policy rate. Recall that at the last forecast update in June, the bringing forward of expected rate hikes for the median member into 2023 had a significant impact on the USD.
- Sustained strength has been evident since, a key factor for the NZD languishing at its current level, and spending some time sub-0.70 over the past few months, despite a nearly 100bps increase in NZ's 2-year swap rate over that time.
- If it is evident that a number of FOMC members are bringing forward their expectation of timing for the first rate hike - and recall that 7 out of 18 members thought a rate hike in 2022 was appropriate - then the USD could be expected to be well supported. It would only take 3 members to move their "dot" from 2023 to 2022 to bring forward the median expectation of a rate hike into next year. Not quite as important, but the market will also be sensitive to the first publication of the 2024 dot, as a signal for how aggressive the Fed might be when the tightening cycle gets underway.