FOMC: What to expect from the June meeting and press conference – Deutsche Bank

The Fed should raise rates another 25bp on Wednesday and signal that an announcement about beginning to phase out balance sheet reinvestment is likely in the coming meetings if the economy remains on track, says Deutsche Bank's Peter Hooper.

Key Quotes

“Beyond this signal, we do not anticipate that the Fed will provide specific details about various aspects of the balance sheet unwind (e.g., the initial size of the caps). But with the rate hike and the shift in balance sheet policy seemingly well anticipated by the market, the key question for the meeting will be whether the Fed provides any additional guidance about when the next rate hike is expected to occur and, relatedly, whether they will pause when announcing the change in their balance sheet policy.”

“The median dot for 2017 is likely to remain at three rate increases, indicating that another hike after June is still expected this year, but we anticipate that the Committee will leave itself plenty of flexibility with the timing, neither indicating that a hike will come in September nor that they have decided to pause when they announce a change in their balance sheet policy.”