All eyes on FOMC today – Danske Bank

According to analysts at Danske Bank, today's highlight is the Fed meeting tonight.

Key Quotes

“We expect the target rate will remain unchanged at 2.25-2.50% and no major changes to the statement. The big question is what the Fed will signal about being 'patient'. We expect the Fed to lower its 'dot' signal to one rate hike in 2019 (down from two).”

“We expect them also to be revised lower for 2020 and 2021 and would not be surprised if the Fed signals 'one and done'. That said, the Fed has begun downplaying the importance of the dots, so we would be careful putting too much weight on them going forward.”

“Our current base case is two rate hikes (in June and December) based on our overall positive economic outlook, but if the Fed continues focusing on inflation expectations, a June hike seems less likely, as market-based inflation expectations are well below the historical average.”

“The Brexit discussion continues to draw market attention and in particular the letter that PM May is likely to send to EU council president Tusk later today (more below). The UK CPI inflation for February is unlikely to drive the GBP.”