Barclays Research discusses its expectations for this week's FOMC policy meeting.
"All eyes are on next week’s FOMC 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.