Wednesday, 18 September, 2019
Citadel: FOMC today and difficult to see how the dovish bias is not retained despite the modestly better domestic data. Trade issues remain unresolved and additional geopolitical uncertainty now injected given the Saudi situation should leave the FED striking a cautious tone. Market fulling expecting a 25bps cut and we also anticipate an additional 5bps cut to IOER given recent funding issues. It also seems likely that the FOMC will announce intentions to stabilise the levels of reserves as it becomes apparent that currently there is a palpable reserve shortage. Overall, looking for the positive price action to continue.
CITI: Although the outcome of the September policy decision is all-but-certain to be another 25bp cut, we see slightly hawkish risks to the meeting.
• We expect the Fed to cut rates by 25bp and leave the door open to further easing. The dot plot should reflect a number of FOMC voters projecting 75bp of total cuts this year, but not enough to move the median lower to that level. Presidents George and Rosengren should dissent again at the meeting.
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