FOMC to communicate a slightly dovish shift in policy - BBVA

According to the Research Department at BBVA, the Federal Reserve will use this week FOMC meeting to communicate a dovish shift in its monetary policy. 

Key Quotes: 

“After the negative market reaction to the December meeting, it is likely that the committee will use the January 29th30th statement and press conference to communicate a slightly dovish shift in policy. This will likely include language about proceeding carefully with a heavy emphasis on data dependence and, global and financial conditions.”

“While the tone of the press conference will be slightly more dovish, Powell will likely be careful not to overcommit to an indefinite pause, leaving the possibility of further rate increases in 2019 open if economic conditions remain supportive. In addition, there is a strong possibility that he takes the opportunity to reaffirm the committee’s commitment to its short-term balance sheet normalization plans, while also highlighting that the committee, if needed, would remain flexible to adjust the pace of balance sheet normalization.”

“This meeting will be the committee’s opportunity to engineer its soft landing, after creating unwanted market turbulence during the last part of 2018.”