SEB Research discusses its expectations for tomorrow's FOMC policy meeting.

"Fed funds rate. 75bps hike to new target range of 2.25-2.50 %. 

QT. No changes to May decision. USD 95bn monthly cap will be phased in after 3 months. The Fed is currently focused on rate hikes and does not need to create additional volatility from changes to its balance sheet policy," SEB notes.

"Guidance. The Fed will continue to signal “ongoing” increases in the target range and will keep stressing the inflation part of its goal and the need of continued rapid policy tightening until a peak in inflation is assured. Mr Powell will signal another 50 - 75bps hike for September, contingent on data (primarily inflation, inflation expectations, labour market tightness and earnings).

SEB forecast. 75bps hikes in July and September to be followed by more gradual 25bps hikes to 3.50 -3.75% by year - end 2022, which will also be the peak," SEB adds.