Fed Policy Outlook: FOMC began its 2-day meeting
Fed Policy Outlook: FOMC began its 2-day meeting and is widely expected to announce the start of the balance sheet unwind, or QT (quantitative tightening), while leaving its rate posture unchanged. Remember this is a quarterly meeting that includes the release of economic/price forecasts (SEP - Summary of Economic Projections) and a Yellen press conference. Of importance to the rate outlook is the dot-plot and the nuances in the Fed chair's remarks. The Committee was still expecting a total of three rate hikes this year at the June 13, 14 meeting, and that's expected to be the case this time too, keeping the door open for a tightening at the December 12, 13 meeting. Analysts also look for the FOMC to maintain the consensus view of three hikes in 2018. While the Fed believes there should be little market reaction to the gradual and well telegraphed unwinding of the balance sheet, it should be "like watching paint dry," said Yellen in June, officials may be too complacent in their overall assessment on the market responses to policy actions.