MUFG Research discusses its expectations for today's FOMC policy decision. MUFG is in-line with consensus in expecting 25bps hike from today's policy decision. 

"There are really only two ways for the FOMC to trigger a clear hawkish reaction by the financial markets – either by hiking by 50bps and suggesting more is still required or by explicitly stating that the Fed intends to hike by more than the just one further 25bp move implied by the OIS market," MUFG notes. 

"The first option is just too aggressive and is very unlikely given the flow of data since the December meeting. The second option is where there is scope. The median dot from only December is that the FOMC expects to hike to 5.125% - 75bps of hikes, one more than currently priced. So if the FOMC wants to be hawkish it will surely focus on this divergence between FOMC thinking and market thinking. A message delivered by Powell that the FOMC remains happy with the December guidance/dots and sees no reason to deviate is what would get most traction in the markets," MUFG adds.