Fed: A more dovish FOMC seems likely - Wells Fargo

Next week, the Federal Reserve will hold its 2-day meeting. According to analysts from Wells Fargo, the FOMC will sound more dovish in line with their expectation of a pause in rate hikes until late in the second quarter.  

Key Quotes: 

“It is widely expected that the FOMC will leave its policy rate and balance sheet program unchanged at its January meeting. We expect the statement and Chair’s press conference—now held after every meeting—to reflect a more cautious and uncertain outlook, however.”

“The committee is likely to acknowledge signs of slowing growth based on “available data”—a nod to the fact that the partial government shutdown, an added source of uncertainty, has delayed the release of some key data (including the first look at Q4 GDP, originally due Wednesday as well).”

“Given the more conservative outlook, the statement may also remove the notion that “further gradual increases” in the fed funds rate may be necessary.”

“We believe the FOMC will remain constructive on the U.S. outlook, but the more dovish tone would be supportive of our expectations for the FOMC to pause further rate hikes until late in the second quarter.”