Powell's Q&A with the press sometimes moves markets more than the actual post-meeting statement. That process is expected to start in the summer, and Fed Chair Jerome Powell likely will be asked to address it during his post-meeting news conference. Most Wall Street estimates figure the Fed will allow about $100 billion in bond proceeds to roll off each month, rather than being reinvested in new bonds as is currently the case.

'Balance sheet reduction will likely be discussed but increased uncertainty makes us think formal normalization principles will be announced in May or June,' Citi's Hollenhorst said. As that ends, the FOMC will start to chart the way it will allow the holdings to start reducing, a program sometimes conversely called quantitative tightening. The bond-buying program, sometimes called quantitative easing, will wind down this month with a final round of $16.5 billion in mortgage-backed securities purchases. To be sure, the central bank is not expected to take any firm action on this issue this week. Outside the questions over rates, inflation and growth, the Fed also is expected to discuss when it will start paring the bond holdings on its nearly $9 trillion balance sheet. The Fed's December projection for unemployment this year was 3.5%, which could be tweaked lower considering the February rate was 3.8%. 'It has already raised food and energy prices and it threatens to create new supply chain disruptions as well.' 'The war has pushed the Fed staff's geopolitical risk index to the highest level since the Iraq War,' Goldman economist David Mericle said in a note over the weekend. The Atlanta Fed's GDPNow gauge is tracking first-quarter growth of just 0.5%. December's SEP pointed to GDP growth of 4% this year Goldman Sachs recently lowered its full-year outlook to just 2.9%. Still, the sharp upward revision to the 2022 figure 'should keep Fed officials focused on the need to respond to too-high inflation with tighter policy settings, especially against a backdrop of strong (if now more uncertain) growth and an historically tight labor market,' Citigroup economist Andrew Hollenhorst wrote in a Monday note.Įconomists figure there also will be adjustments to this year's outlook for GDP, which could be slowed by the war in Ukraine, explosive inflation and tightening in financial conditions. The longer run, or terminal rate, also could get boosted up from the 2.5% projection. Regardless of exactly how it goes, the dot plot will see substantial revisions from the last update three months ago, in which members penciled in just three hikes this year and about six more over the next two years. 'Our call is that the Fed will be carefully hawkish and will avoid springing any surprises that might add to uncertainty and volatility.' The real question is whether the Fed is carefully hawkish or aggressively hawkish, and whether the meeting springs any surprises or not,' wrote Krishna Guha, head of central bank strategy for Evercore ISI. 'We think the message around the rate hike has to be at least somewhat hawkish. A basis point is equal to 0.01%.įrom a market perspective, the key assessment will be whether the hike is 'dovish' - indicative of a cautious path ahead - or 'hawkish,' in which officials signal they are determined to keep raising rates to fight inflation even if there are some adverse effects on growth.

However, traders are split evenly over whether the FOMC will hike by 25 or 50 basis points in May should inflation - currently at its highest level since the early 1980s - continue to push higher. Personal Loans for 670 Credit Score or LowerĬurrent pricing indicates the equivalent of seven total increases this year - or one at each meeting - a pace Mocuta thinks is too aggressive. Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit

Next meeting of federal reserve