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  • Barclays Research discusses its expectations for this week's FOMC policy meeting.
  • As is widely anticipated, we expect the FOMC to again slow the pace of hikes, raising the target range by 25bp to 4.5-4.75%. Such a move would be in line with pre-blackout FOMC communications and supported by accumulating evidence that inflation and wage growth are decelerating, and signs of a slowing economy. In the face of these data, market expectations see the funds rate topping out in a range of 4.75-5.00% this spring, and an initiation of rate cuts as early as July," Barclays notes.
  • "However, the FOMC's work is not yet done, even if the recent declines in inflation and wage growth give it more time to assess the effects of past policy actions. A key challenge for the FOMC will be to execute its transition to smaller rate hikes without furthering expectations that an end to its hiking cycle is imminent. The post-meeting press conference should be particularly interesting in that respect. We expect Powell to signal a peak rate of 5.1% in 2023, possibly by mentioning that last December's dot plot by the FOMC remains appropriate," Barclays adds.
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