Citi discusses its expectations for this week's FOMC July policy meeting.
"Citi Economics has published its Fed preview. The team notes that the July 29th FOMC is unlikely to deliver significant surprises in the statement or post-meeting press conference. Most interesting will be the internal discussion around forward guidance.
Minutes from the June FOMC meeting made it clear that there is broad -based support for formal outcome-based “forward guidance” that will tie a rise in policy rates to the economy achieving certain objectives," Citi notes.
"The interesting debate at this meeting, likely most evident in minutes released August 19, will be the exact form and wording of that guidance – which likely will be delivered at the September meeting. Any forward guidance is likely to be consistent with the far-forward pricing of the likely first rate hike, meaning any market reaction will be muted," Citi adds.