Bank of America Global Research discusses its expectations for this week's July FOMC policy meeting on Wednesday.
"At the July Federal Open Market Committee (FOMC) meeting, we expect the Fed to raise the target range for the Federal funds rate by another 75bp to 2.25-2.50%, up from 1.50-1.75% currently. Following the June Consumer Price Index (CPI) report, speculation had risen that the Fed might lean toward a Bank-of-Canada-sized 100bp rate hike, but a number of FOMC participants took to the airwaves and suggested a 75bp rate hike remained the prudent course of action. The Fed would have signaled if it wanted to hike 100bp," BofA notes.
"On the balance sheet, we expect no change in policy. The FOMC should continue to reduce its securities holdings, which include monthly caps of $30.0bn and $17.5bn per month," BofA adds.