Rates hike 25 basis points on Wednesday, but Federal Open Market Committee (FOMC) hikes not yet complete

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• Barclays Research discusses its expectations for this week’s FOMC policy meeting.
• As widely anticipated, we expect the FOMC to slow the pace of the increases again, increasing the target range by 25bps to 4.5-4.75%. Such a move would be consistent with FOMC communications before the blackout and backed by mounting evidence that inflation and wage growth are slowing, and signs of a slowing economy. Faced with these data, market expectations see the funds rate peaking in a range of 4.75 to 5.00% this spring, and an initiation of rate cuts as early as July,” notes Barclays.
• “However, the FOMC’s work is not yet done, although recent declines in inflation and wage growth give it more time to assess the effects of past policy actions. A key challenge for the FOMC will be to execute its transition to lower rate hikes without deepening expectations that the end of its hike cycle is imminent. The post-meeting press conference should be particularly interesting in this regard. We expect that Powell points to a peak rate of 5.1% in 2023, perhaps mentioning that the dot chart from last December by the FOMC remains appropriate,” adds Barclays.