FOMC meeting, nothing new but stay tuned for Jackson Hole
The FOMC will be meet this coming July 28th and 29th.
Here is what we expect:
- Dovish forward guidance, reaffirming that rates will be held low for a long period of time.
- The Fed will confirm the continued expansion of their balance sheet at the current pace and conserve flexibility.
- They will maintain their support to credit markets.
- They will not increase their accommodative stance: Uncertainty remains high, but the economy has recovered faster than most economic forecasts (Retail sales, employment, etc.).
- They will reaffirm their opposition to negative rates.
- They will not implement yield-curve control. The topic is still under discussion, but we believe Fed members will prefer to wait for more macro-economic clarity before acting.
- They will communicate that their strategic review on inflation is still ongoing but provide no further information. The Jackson Hole conference (August 28) might be a good place to introduce some of the conclusions.
All in all, it should be a non-event for financial markets.
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