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Fed preview: The biggest test for Jay Powell so far
The FOMC-meeting on Wednesday will include updated projections and a new dot plot, but we find the discussion on technical elements much more relevant for markets. Markets already price in almost one full rate hike during 2022, and we doubt that the dot plot will look more hawkish than that. The market pricing for the next 12 months is still very muted. We have four main questions ahead of the FOMC meeting on Wednesday 1) What is “moderate overshooting” on inflation? 2) Will the Fed prolong the SLR-relief? 3) Will the Fed try to contain long bond yields? 4) Will the Fed try to move EFFR back to the middle of the ... (full story)